Homeowners should consider refinancing while mortgage rates remain low. Refinancing includes certain fees but may result in smaller monthly payments. It may involve the existing mortgage servicing company or a completely new bank. Southern NH Homeowner Mortgage Refinancing Tips including the expenses and reasons for refinancing are provided in this article.
Factors to Review Before Refinancing a Loan
Consider the Home Values
The real estate market can impact your refinancing alternatives. If property values declined compared to when you closed on your home, this might make refinancing more complicated. Banks typically issue loans up to a certain percentage of the value of a property, which is determined by an updated appraisal. If your mortgage principal is higher than that amount, you might need to reduce your balance before a refinance. FHA loan holders (and possibly others) have the benefit of a streamline option that does not require appraisals. There are also special programs for home owners under water due to declining home prices. A local mortgage professional can assist you with identifying various programs.
Mortgage Rate Fluctuations
The traditional rule is to refinance when the prevailing rate drops at least one percent lower than your current rate. The savings each month would make the up-front costs of refinancing worthwhile. Additionally, certain lenders will not authorize a refinance until the difference in monthly payment is greater than a minimum percentage.
Costs and Other Factors
There are fees that come with refinancing a mortgage. These include closing fees, bank fees, pre-paid interest, and mortgage insurance, just to list a few. Fees can differ with each bank and type of mortgage. Obtain a quote prior to refinancing and analyze it against the monthly savings. Also note that you will have a gap between when your current loan is paid off and the new one is due, so those funds can go towards those expenses.
Southern NH Homeowner Mortgage Refinancing Tips
Beyond the Southern NH homeowner mortgage refinancing tips provided above, factor in how many years you are likely to reside in a property since the savings is only worthwhile over many years. Interest options are also influenced by your personal finances, so consult with a local mortgage officer for information on your personal situation. The information above is general and does not include things applicable to your mortgage or your finances.