So you've read that interest rates are near historic lows and you want to figure out if you can refinance. Financing has become significantly harder to do and more expensive in the past few years, thanks to the financial crisis. But refinancing is still possible and may make financial sense.
In this article we will run through some of the basic issues you should contemplate to help give you a framework for deciding whether to refinance. The best person to help you sort through this framework and help you reach a final decision about when to refinance is your mortgage lending professional. But doing a little homework beforehand will help you ask your mortgage professional the right questions.
1st Question:
Planning on moving? The first item to consider is whether you're going to own the house in question for at least two to four more years–the longer the better. If you're not planning on owning for at least a couple years, refinancing may not be a net benefit to you. HOWEVER: The bigger the mortgage, and the bigger the differential between your current mortgage interest rate and the rate you might get by refinancing, the more refinancing might make sense even on a shorter term basis like two years. So rather than dismiss the idea, this is a good topic to discuss with your mortgage professional in terms of your unique situation.
Check back for part 2 with more questions to ask your loan advisor.
Leonard P. Baron, MBA, CPA, is a San Diego State University Real Estate Lecturer, a long-term real estate owner, author of Real Estate Ownership, Investment and Due Diligence 101 and loves kicking the tires of a good piece of dirt! At ProfessorBaron.com you can download his free "Real Estate Buying Due Diligence Checklist" under Chapter 1: Due Diligence. No sign up or registration needed–just download it!
Contributing author Wendy Mihm is the founder of FinancialRx.com, for women who are busy, competent and have it all together–except for maybe one thing: their family's finances. See more information on the website to get your financial house in order.
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