Refinancing

Refinancing is a great option for many home owners. Any home can be refinanced, whether it is your owner-occupied residence, a second home, or investment property, even if it was privately financed by your seller.  There are just as many loan programs available to home owners as there are to home buyers.  The big choices in your decision to refinance your home include when to refinance and what loan option to choose.

You must be in your new home for one year before most lenders will consider refinancing your home.  If you have an adjustable rate mortgage, you may want to refinance before your rate changes. 

It is common to refinance your mortgage to lower your interest rate.  When weighing this option, get a total of closing costs from your lender.  Calculate how long it will take you to recoup your closing costs in saved interest.  You will need to know your old interest rate and your new interest rate and then use the following calculator link. If you intend to keep your house longer, refinancing is a great choice.

Often home owners choose to refinance their homes in order to obtain cash equity to make home improvements or pay off other debts.  Instead of refinancing your mortgage, you may decide to borrow money on a second mortgage or line of credit against the home.  Unfortunately, many borrowers face a much higher interest rate on the second mortgage than they pay on their first mortgage.  It may pay to go ahead with a refinance of the first mortgage in order to save money in the long run. 

Another option is a home equity line.  Home equity lines are a great way to tap into your home’s equity.  It is a good idea to have one open before you need it.  Many lenders have no-closing-cost lines that cost you nothing to open.  You can keep the balance at zero but the line of credit is there to draw on if you need the money for just about anything, including a large purchase or home improvements.  If you know that you are going to use the money, it might be better to choose an equity loan with closing costs, as lenders tend to offer them at lower interest rates than no-cost equity loans.  Under most circumstances you can deduct the interest you pay on a line of credit up to a principal balance of $100,000.00 on your tax return.

If I can assist you in making these decisions, please contact me.