Rates are at historic lows and the word on the street is that they are going to start going up in 2015. You want to make the right decision for your family. Here we have 5 basic items to consider in making your decision.
What does the future hold?
Will you be staying in your current home for the next 5 or more years? Are you planning on staying in your home though-out the life of the loan? Do you plan to sell in the next 5 years? If you can regain the closing costs in 3 years and you will be saving a considerable amount on your monthly payment then it could be worth it.
If you have no idea whether you are staying or going to leave then it may be beneficial just to stay with what you have. Or if you think you may relocate with your job, it’s better to wait. Do you you have enough equity in your home? The interest rates may be falling which make it a great time to refinance but do you have 20% equity in your home? If you have less than 20% equity there are loan programs for you but you may have to pay a Mortgage Insurance Premium (MIP) which could have a negative impact on the amount saved.
Calculate when you would recoup the closing costs.
- Estimate your closing costs. Example $4,500.00
- How much will you save a month with you new loan. Example $250.00
- Divide the sample closing costs by the new monthly payment $4,500.00 / 250.00 = 18 months.
- It will take 18 months to recoup your closing costs.
The higher your credit score the better your interest rate. If you plan on refinancing hold off on any new credit cards or any new debt. You can obtain a free report through AnnualCreditReport.com once a year through one of the large credit bureaus (Equifax, TransUnion, or Experian). Take a look at your credit report; if you notice any errors which is quite common dispute them with the creditor.
Contact one of American Capital Home Loans Professional Mortgage Advisors to guide you through the process.
Phone 760.975.0255 or Email: firstname.lastname@example.org