In this day and age of low mortgage interest rates, many people wonder whether refinancing their Glenview home is a good idea. If you're in that group, here are a few things to consider before deciding to go the refi route.
First, you need to know where you currently stand, so read the fine print on your current mortgage to see if you will have to pay any fees or penalties for paying off that mortgage early. Next, it's important to know if you now have a fixed mortgage rate or a variable rate, such as an ARM (Adjustable Rate Mortgage).
A variable-rate mortgage means that at some point in the future, if it hasn't happened already, your mortgage rate can increase. This is predetermined and generally happens somewhere between one and five years after you obtained the mortgage.
Refinancing reached its highest point in 2003, and it can help you save money on the total cost of paying off your home. One way to see if refinancing is for you is to figure out how long it will take your overall refinancing savings to make up for what the refinance will cost you in fees, etc.
To do this, find out how much you'll pay to refinance (cost to refinance). Then determine how much your new monthly mortgage payment will be. Subtract that from your current payment (don't include any taxes, insurance, or other things that could be included in your monthly payment). This is your monthly savings. Now divide the amount it will cost to refinance by the monthly savings. The answer you get is the number of months it will take to make up for the cost of refinancing. After you reach that point, you'll start saving on your repayment of the mortgage.
If you do refinance, you'll either get a fixed-rate mortgage or an adjustable-rate mortgage. If you plan to sell the home in just a few years, the adjustable-rate may be a better option for you, if you can sell before the rate adjusts. If you'll be living there long-term, a fixed-rate mortgage is probably a better option.
Another thing to consider is points. If you are willing to pay the lender points at closing, you will be able to get a lower interest rate. Just be sure that the savings are worth the extra money you're spending on the point or points.
If refinancing is not an option for you, you may want to consider selling your current home and finding another dream home in the Glenview area. The Marla Schneider Team is here to help you with both buying and selling. We are experts in the area, and can help you every step of the way. Call today at 847-657-3790 or contact us online.