Archive for the ‘Refinancing’ Category

The short answer that I have always believed is that if you are able to cut your interest rate at least one percentage point and are going to stay in that home for several more years, it MIGHT be worth it to refinance.

One of the best explanations that I have seen is from the USAA Mortgage, and it is just an exercise that you do to come up with the number$ that you need to make a decision that is right for you. Here is what they said:

In this example, if you were only planning to stay in that home for two years, it might not be the best thing for your pocket book to refinance.

But there are reasons to refinance other than lowering the interest rate. Some things to consider:

• Shorter term – pay off loan faster
• Longer term - lower monthly payments
• More customer service oriented lender
• ARM vs. Fixed
  

Just remember that there is more to consider than an interest rate – all lenders are not created equal. Watch out for hidden fees (and not so hidden fees). Make sure that those fees are reasonable.

And remember that there are a lot of people trying to refinance right now, so the processing time may be longer than you would think – lenders are going to process the new home purchases first, because they have a time constrain that your refinance does not have.

So take a look at it and see if it will make financial sense for you and ask questions until you feel comfortable that you understand the pros and cons.

Jim Jones can be reached at 573-529-6904. Prudential Vision Properties is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity.