Poli Mortgage Answers Three Questions About Refinancing Your Home

June 18, 2013 - PRLog -- 1.)  Why refinance?

     There are many reasons for a homeowner to consider refinancing an existing mortgage loan. If you bought your home when interest rates were higher than the historic lows seen in the past few years, chances are you could reduce your monthly payments by negotiating a lower rate on your home loan – and save yourself thousands of dollars over the life of the loan. Some homeowners who initially opted for an adjustable-rate mortgage (ARM) choose to switch to a less risky fixed-rate loan. Still others wish to change the term of the loan to pay off a home more quickly – with reduced interest rates, it’s possible that your payments might rise only slightly or even remain static if you reduce the duration of your loan to a shorter term.

2.) When is the “right time” to refinance?

If you are looking into refinancing, your first consideration should be whether interest rates are significantly lower than when you initially financed your home. As with any financing, it’s smart to shop around for the best rate. You’ll also want to think about how long you plan to stay in your home. If you are thinking about moving soon, you probably won’t see any savings from refinancing. You also need to consider how much you might pay in closing costs on the new loan, and determine whether the savings in interest will offset those costs. Some loans also carry prepayment fees that you will owe if you pay the loan off before it is due.

Once you’ve researched available rates and investigated the terms of your current loan, you can use an online calculator to determine whether refinancing will save you money. It’s important to remember that your loan term will “reset,” so if you refinance for the same term, you should calculate whether starting from scratch will actually save you money in the long term.

If you aren’t planning on staying in your current home or the interest rate for which you qualify doesn’t differ significantly from your current rate, refinancing probably isn’t the right course of action for you. You can talk over your options with a mortgage broker.

3.)  What are the potential obstacles to refinancing my mortgage?

As with any loan, you won’t automatically qualify for a favorable interest rate simply because you see it advertised. You will need to be in good standing in terms of your credit rating if you hope to get a favorable interest rate. If you are thinking of pursuing a refinance, you should find out your credit score with the three major credit reporting agencies – Experian, TransUnion, and Equifax – to make sure there are no unpleasant surprises.

Your lender will also likely require a new home appraisal prior to refinancing. It’s important to note that your home must appraise for what your lender expects in order for you to be approved for the most favorable interest rate.

Contact: Jillian Gregoriou

Email: Jillian@exposeyourselfpr.com

Tel: 617-797-9869