Is Refinancing the Right Decision for You?
Just because rates are lower does not necessarily mean that a refinance is the best financial move for you.
Mortgage rates are still hovering near record lows and you may see this as a prime opportunity to secure a more favorable interest assignment and save money on your payments by refinancing. However, just because rates are lower does not necessarily mean that a refinance is the best financial move for you. Before discussing your options with a lender, examine the below considerations to make sure changing your terms is truly in your best interest.
Determine Your Break Even Point
A recent MSN Real Estate article noted that many homeowners enter into refinance agreements without crunching the numbers and ensuring that they will be saving money. Low home loan rates can seem appealing, but if the rate you’re already paying is low, you might end up spending more money in the long run. This is because the process of refinancing your loan is similar to the one you undergo when you purchase a home – complete with fees and closing costs.
“It’s not as simple as saying, ‘I’ve got a 5 percent mortgage and rates have dropped to 4 percent, so that’s a better deal,'” Erin Lantz, director of real-estate website Zillow.com’s Mortgage Marketplace, told MSN Real Estate. “You have to think about things like what your closing costs will be and how much longer you plan to stay in the home.”
Get Everything in Writing
You will likely shop around for the best refinance rates and terms. However, after a lender determines the rate you will be assigned, it’s important to get it in writing to complete the refinance process without any disruptions or issues. This can help ensure that your rate is locked in and help you plan ahead for your new mortgage payment and budget more efficiently.
Get more information about home financing, and check out the ways Zions Bank can assist in your refinancing decision.