Should You Refinance Now?

Should You Refinance Now?

If you are on the fence about whether or not to refinance your home, just know that interest rates may not be this low for that much longer.

Janet Yellen, powerbabe genius of the Fed, has been threatening to raise interest rates for some time now since the QE bond purchase program has phased out and the economy has showed signs of recovery.

This week’s stock market ‘flash crash’ had peeps wondering if the fed would hold off on the interest rate hike, but the latest news is that a September boosterini is still on the table.

Refinance Decision Factors

  • How long do you plan to stay in the home? You want to break even on closing costs before you move.
  • How much will you save on your monthly payment? A $200 monthly savings is a good target.
  • Will you break even on your closing costs before you move? Take your total closing costs and divide by monthly savings to get the number of months it will take to break even.
    • Example:  Closing costs = $4000.  Monthly savings = $200.  To break even on refinance for this example, it will take 20 months. 
  • Do you need to switch from a risky adjustable mortgage to a safe 30 year fixed loan? Do it now unless you are ok with your monthly payment going up when the interest rates rise.
  • Do you care if the total cost you pay for the home loan increases?  This may happen if the new loan has a longer term than what you have now.
  • Run the numbersUse a Refinance Calculator to see if it’s worth it to refinance.

The Dogz recently refinanced the doghouse from a risky, yet beneficial adjustable rate loan to a safe 30 year fixed.   In addition, their monthly payment decreased by $200 per month.  Hooray! Major Bonus – they got to work with great peeps like James P and Russ at the mortgage company who kept things rolling smoothly.

If you do the math and refinancing turns out to be a smart move for your financial situation…  Go For It!  Woof!

 

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