Mortgage lenders are fielding an influx of calls on refinancing these days as borrowers hear about historically-low rates. Here is some guidance from the lender perspective on whether refinancing may be right for you.
One of the first questions I ask my clients is whether they plan on staying in the home for at least 3 to 5 years. If not, I advise that it may not be worth potentially adding closing costs to your loan balance if you won’t be in the home long enough to recover the expense. Ideally it would be a 24-month or less recovery timeframe to ensure a benefit to the borrower. Another consideration is your current loan balance and interest rate. As an example, if you owe over $400,000 on your home, even a 1% lower rate could potentially save several hundreds of dollars a month. If you only owe $100,000 or less, you would need to consider the “2% Rule” of lowering your rate to justify the expense, again only if you don’t see yourself moving in the next 3 to 5 years.
With these low rates and a hot housing market, you may be interested in selling your current home rather than refinancing. A market analysis from your Realtor would show how much your home has increased in value and together with a mortgage consultation could help provide the information you need to make the best decision for your situation.
Capital City Home Loans
1301 Metropolitan Boulevard | Tallahassee, FL 32308
Office 850 402 7977 | Cell 850 556 2365
NMLS #75615 | MLO NMLS #451775
Equal Housing Lender