The most common question from Texas refinance prospects is, “How do you know when a refinance makes sense”, or “How do you know when a refinance is right for me”?
Here are 2 things to look for to determine if refinancing your home now makes sense…find what or which is most important for your situation.
1. Are you going to be in the home long enough to make up the costs for refinancing?
If you are going to be in the home for only a short time, say 4-5 years, you might look into a refinance that comes with little or no costs, and especially look for a loan structure that comes without paying points. If your closing costs are $3,000-$4,000, you need to see if the amount you are saving monthly will recoup in that time, AND put you in an equity position at the end of those years better than where you would be now. If your agenda is to just make your total out of pocket monthly costs come down, your angle in looking at this may be different. It’s important you compare future loan amounts in your current situation to what your new loan would look like after a determined number of years, because if it saves you some monthly, but you go to sale your home in 5 years and you owe more than you would have if you didn’t refinance, you may have just spoiled your intentions. If you would like me to look at what your current situation would like look in 5 years or when ever you think is best versus a possible refinance scenario in that same scenario, please contact me. I won’t hold you to any obligations. I do loans anywhere in Texas.
2. If you can afford your current payment, and maybe can afford an extra $100 or couple hundred more a month, have you considered refinancing into a shorter term mortgage?
If you are currently in a 30yr fixed and could afford paying a bit higher in payment, rates are low enough on 15yr and 10yr fixed mortgages, that it’s likely you can refinance into a shorter term and either keep a similar payment, or only take on a bit higher monthly, but BLAST away at principle. For a $200,000 loan in a 30yr fixed mortgage, you would only pay down about $18,000 in the first 5 years of your mortgage. In a 15yr mortgage where your initial loan amount is $200,000, you would pay down closer to $52,000 in principle in the first 5 years. That is $34,000 better in just 5 years, so you can see how easy it is to make sense in a refinance where you lower your term. Click for a FREE MORTGAGE REFINANCE EVALUATION, no obligations.