What to Know Before You Refinance Your Home Mortgage
When loan rates drop, you may consider refinancing your loan in hopes of reducing your monthly loan payment. While refinancing sounds appealing, refinancing is not always the best option for everyone. If you are considering refinancing, consider the questions below.
Will You Pay More In The Long Run?
While refinancing may provide you with a lower interest rate, you must consider if refinancing will leave you paying more in the long run—even if it reduces the current monthly mortgage payment. The newer your loan is, the less you have paid on your principal, meaning that much of what is being refinanced is interest. If you are going to refinance, and maintain or shorten your current loan term, refinancing may save you money. But if you are going to refinance and lengthen your term, then you may be saving more on a monthly basis—but paying more in the long run.
How Much Longer Does Refinancing Commit You To Your Home?
Another thing to consider if you will be extending the term of your loan is where you will be in the next 10 to 20 years—or whatever the new end date will be. It can be hard to determine where life will take you in the next decade or two, so while refinancing may be of benefit today—it may commit you to your home for a longer length of time. Consider factors such as:
- Are you working in a job you want to be in long-term?
- Is the size of your family growing or shrinking?
- What condition is your home in, and what major repairs do you have to consider?
- Will you want to move closer to family at some point down the road?
If you are unsure of the answers to the questions above, extending the term of your loan may cause more stress in the long run.
What Are The Fees And Penalties?
If you have considered the factors above, and see that refinancing will be financially beneficial—also inquire about what penalties and fees are associated with refinancing. Your current loan is likely to incur a prepayment penalty, and refinancing can have fees upwards of $3,000.
Whether you are financially stressed, or are simply looking for more ways to save—refinancing may help you achieve your financial goals. To help you determine if refinancing is right for you, seek the expertise of a mortgage lender and broker to help you determine if refinancing is right for you.
If you are struggling with the decision to refinance your home, turn to the mortgage experts at Marquee Mortgage. We can help you lower your mortgage payment and take advantage of today’s lower rates. Whether you’re looking to refinance your current mortgage or finance the purchase of a new home, let the mortgage brokers at Marquee Mortgage help you to finance the home of your dreams.