Good Morning,
Once again, rates are staying at tremendous lows but I want to spend today’s update briefly touching on something I go over with each of my clients when refinancing, namely, does it make sense to refinance at the lowest rate you can get? The answer: Sometimes but not always.
There is never one single interest rate to choose from on a given day, there is a range of interest rates you could pick and the amount of closing costs to go along with that ranging from no closing costs, to 3 or 4 percent of your mortgage balance to obtain the lowest rate available if it makes good financial sense. There are two key factors I look at when advising clients on what will be in their best interest. Refinancing is an investment, we need to look at both the short and long term ramifications of the investment to ensure it is beneficial for the homeowner.
1. How long do you plan on living in the home? 1-3 years? 5-10 years? Longer?
2. What are you hoping to accomplish? Do you want to pay off your mortgage early? Do you need a payment break from what you currently pay?
Based on these two simple questions, I put together a full analysis of where the homeowner is at currently, where they want to get to and what time frames they would need to be comfortable with for their investment to put them in a better position than they currently are in. If you’re main goal is to pay off your mortgage early and stay in the home for the long haul, then it most likely makes sense to go for the lowest interest rate and payment while being sure to pay additional to the principal. If you want to get ahead on your mortgage before you sell then the calculations become much more individualized and specific. This is where having a Mortgage professional on your team is invaluable when compared to a standard loan officer who chooses not to or is unwilling to help a homeowner understand if a refinance is really in THEIR best interest, not just the best interest of the loan officer themselves.
Have a great week!
Matt
Rates: 30 year fixed at 3.625% (APR 3.763) and the 15 year at 2.875% (APR 3.118), FHA: 3.375% (APR 4.269): As always rates change with individual credit scenarios and programs, APRs are estimated based off of a $250,000 purchase price with 20% down and a 740 credit score, if you want an exact quote, call. These are not quotes, merely a baseline measure to gauge how rates change from week to week.
Matt
Matt Royer
Mortgage Consultant, CMC | Homes Mortgage
NMLS# 366970
612-232-7646 c
651-770-0637 o
651-294-1001 f
www.MattRoyer.com
mroyer@homesmortgage.net
Comments(0)