Homeowners should evaluate refinancing while interest rates remain low. Refinancing includes some up-front costs but can lead to smaller monthly expenses. It can involve the existing lender that retains a loan or a completely different lender. Below you will find Newburyport MA homeowner loan refinancing advice including the expenses and benefits of refinancing.
Is It the Right Time to Refinance a Home
Consider the Home Values
The real estate market can impact your refinancing options. If home values declined from when you purchased the property, this may make refinancing more difficult. Banks typically lend up to a specific percentage of the value of a property, based on an appraisal. If your mortgage balance is higher than that amount, you may have to pay down your balance in order to refinance. FHA mortgages have the advantage of a streamline refinance that does not require an appraisal. There are also programs for borrowers who are under water due to the decrease in market values. A local mortgage professional can help you identify these different alternatives.
Mortgage Rate Variance
The general practice is to refinance when the interest is at a minimum one percent lower than the current rate on your mortgage. The monthly decrease in payment over the life of the loan would make it worthwhile. Also, some mortgage companies will not authorize a refinance until the difference in monthly payment exceeds a specific percentage.
Costs and Other Considerations
There are expenses that come with refinancing a home loan. These include closing costs, bank fees, up-front interest, and title insurance, just to name a few. The total cost can differ depending on the lender and mortgage product. Obtain a estimate before refinancing and analyze it against the monthly savings. Also note that you will have a delay between when your existing mortgage is paid off and the new one is due, so that amount can be put towards your closing costs.
About Newburyport MA Homeowner Loan Refinancing Advice
On top of the Newburyport MA homeowner loan refinancing advice offered above, also consider how many years you intend to live in a property since the savings is likely realized when summed up over several years. Interest terms are also impacted by your personal finances and credit scores, so get advice from a local loan officer for particular information. The information above is general and may not cover everything applicable to your home or personal situation.