Should You Refinance?

If you're wondering whether mortgage refinancing is right for you, we can help. Here are some tips on evaluating your current home loan to determine if you should refinance.

Examine Your Loan Documents

Before you apply for low cost mortgage refinance quotes, dig out the documents for your current loan and examine the terms. What's your interest rate? Is it fixed or adjustable? If the rate is adjustable, when will your ARM reset? Figure out how much your payments and interest rate could increase when your ARM resets. Finally, look at what your prepayment penalties are, if any. If you choose to apply for low cost mortgage refinance quotes and get a new loan, you may face financial penalties for paying your current loan off prematurely.

Compare Interest Rates

An important piece of information to know before applying for low cost mortgage refinance quotes is how your loan's interest rate compares with current market interest rates. If you took out a fixed-rate mortgage a few years ago and interest rates have dropped since, you might save substantially on your payments by refinancing. You could save up to hundreds of dollars per month by looking into low cost mortgage refinance quotes, but this will depend on the difference between your current loan's interest rate and your new loan's rate. Keep in mind as you apply for low cost mortgage refinance quotes that your interest rate will also depend on your credit score and loan-to-value ratio.

Evaluate How Long You Plan to Stay in Your Home

Before you look into low cost mortgage refinance quotes, you should evaluate your long-term plans. If you plan to move in a year or two, refinancing will probably cost you more than it will save you. Generally speaking, the longer you decide to remain in your home, the more sense it would make to refinance.

Calculate Your Break-Even Point

If closing costs on your refinancing loan will be $3,500 and you'll save $100 per month on payments, it would take you three years to recoup those costs. If you plan to move soon, this is why refinancing can end up costing you more than it saves you. Figure out what your break-even point is, or when you will begin to recoup the costs of refinancing, before applying for low cost mortgage refinance quotes. Also consider abbreviating the term of your mortgage to save on interest expense overall. For example, you could change from a 30-year mortgage to a 15-year mortgage to reduce interest expenses over time. For additional inquiries, please check out our FAQ page.