Tips For Refinancing 2020

With mortgage mortgage rates just above multi-year lows industry experts are anticipating 2020 to be a good year for refinancing. Whether it's to lower an interest rate, obtain cash out to improve the home or payoff debts to possibly obtaining a short term (moving from a 30 year fixed rate to a 15 year fixed rate) the opportunities are there for homeowners to improve their financial situation.

Reasons To Refinance:

Every situation is unique and the a golden rule for refinancing is this: only refinance if it puts you in a better financial position. Never do a refinance unless its clear that you are achieving some sort of tangible financial benefit. Here is a quick list of reasons to refinance your current mortgage:

• The current interest rate you have on a 30, 20 or 15 year fixed mortgage is 0.50% or higher than current mortgage rates.
• You have significant credit card debt at high interest rates and you'd like to roll it into a new mortgage. If the refinance savings is significant maybe consider a short term. For example if you're saving $600 per month on a new 30 year fixed mortgage (by rolling in your credit card debt) maybe consider a 25 or 20 year fixed rate mortgage instead.
  
  
• Some or all areas of your home could use a little improvement. Doing home improvements will increase the value of your home. To get an idea of which improvements will result in the greatest increase in value please talk to a local Realtor.
  
  
• You recently obtain a promotion and because of that promotion you are making more money so you would like to switch from a 30 year fixed rate mortgage to either a 20 year fixed rate or a 15 year fixed rate.

Whatever your reason for refinancing is make sure it "makes sense". Also avoid paying lots of fees; here is a "general" idea of reasonable costs for certain loan amounts (including origination fees and points).

• $150,000 ($2,370)
• $200,000 ($2,450)
• $250,000 ($2,700)
• $300,000 ($2,850)
• $400,000 ($2,975)

Again the above is general and it's not to be used as a hard limit. When it comes to points; if you are paying a point compare it to a no point loan. If you are only saving 0.125% - 0.25% on your rate by paying one point you may want to reconsider that option. 

Most people don't keep a mortgage more than 3-5 years so paying points really needs to make financial sense otherwise you're just throwing money away.  Be smart about the fees and also be realistic. Nothing is for free despite what some unscrupulous Loan Officers will tell you.