To re-fi or not to re-fi. . . some helpful toolsl.

Real Estate Agent with RSVP Real Estate WA# 80462

Thanks to the Week magazine, for bringing our attention to an interesting article in the Wall Street Journal, and a tip-off to a great "calculator" to help you make an informed decision.

First off, this article from Jessica Silver-Greenburg gives a few examples of instances where homeowners have been able to substantially reduce their monthly housing expenses by refinancing a loan they took out when rates were higher. If you bought a home when rates were above six percent, have the equity to re-fi, and plan to be in your home for awhile, it's a no-brainer. However, she also makes the interesting point, that if you plan to sell in the semi-near future, an adjustable rate mortgage is worth exploring, as the gap in rates between fixed and ARM's has widened as of late (ie. ARM's have become a really good deal).

Will rates continue to fall? I'll defer to the opinions of the pros on that one, but if you google "home loan interest rates forecast" and investigate some of the results, one thing you'll find across the board is consistent use of words like "volatility" and "uncertainty."

One thing you can do to make a more informed decision is plug your numbers into this online calculator developed by Economists at the University of Chicago, that factors in closing costs, marginal tax rates, and the number of years left on your mortgage. It will tell you at what rate it would be a good idea to "pull the trigger," not to mention it's just kind of fun to play around with it (well, o.k., at least Roger thought so). Most bank's websites have similar tools, so look around your bank's site, while keeping in mind that if you re-fi through your bank, they're going to make a nice chunk of change. The local credit union where I personally bank has a multitude of calculators available to customers & non-customers alike- I especially like this one, which calculates how much you'll save in interest over the long term by re-financing to a lower rate, or to a different type of loan.

Fauntleroy ferry dock on a beautiful autumn day last week

Posted by logoRoger Steiner, Broker



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Roger Steiner

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