Are you thinking of refinancing? Refinancing includes certain fees but can result in a lot of savings on monthly expenses. It may be with the current loan servicing company or an entirely new mortgage company. Arlington MA Home Loan Refinancing Information including the costs and reasons for refinancing are included in this article.
When to Refinance a Home
Consider the Market
The price of homes can impact your refinancing alternatives. If real estate values dropped from when you bought the home, this may make refinancing a bit difficult. Banks typically lend up to a specific percentage of the value of a property, based on an updated appraisal. If a loan principal is higher than that percentage, you may have to bring down your balance before a refinance. FHA mortgages (and some others) have the benefit of a streamline option that avoids appraisals. There are also special alternatives for home owners whose property values are below their loan balance due to the decrease in real estate values. An experienced mortgage consultant can assist you with evaluating different options.
Interest Rate Difference
The normal guideline is to refinance when the difference in rates is at least 1% lower than the current rate on your loan. The lower payment each month will make the up-front expenses of refinancing worthwhile. Additionally, some mortgage companies may not allow a refinance until the difference in monthly payment is greater than a minimum percentage.
Fees and Other Factors
There are fees associated with refinancing a loan. Examples are closing costs, lender fees, pre-paid interest, and PMI, just to list a few. The amount can differ depending on the bank and type of mortgage. Request a quote prior to refinancing and compare it to the overall savings. Furthermore, know that you will have a delay between when your existing loan is paid off and the next one is due, so that amount can go towards those expenses.
Arlington MA Home Loan Refinancing Information
Beyond the Arlington MA home loan refinancing information detailed above, also factor in how many years you are likely to own a property because the savings is only worthwhile over many years. Mortgage terms are also impacted by your personal finances, so get guidance from a local mortgage professional for assistance. The guidance above is generic and does not detail things applicable to your property or your finances.
