Refinancing means replacing an existing debt obligation with a new debt obligation under different conditions and terms. It varies from country to country, state to state and it also depends on many economic factors like inherent risk, projected risk, political stability of a nation, currency stability, banking regulations, borrower’s credit worthiness, and credit rating of a nation.
When interest rates are going down in the market you prefer to refinance. But the question here is that how often you can do it if you have already done it recently. According to the law, there is actually no limit to it. In fact, the more pressing question is that if you have already done it recently then how long you have to wait before doing it again? And since you are bound by your current mortgage so how long a lender will take to let you out of it. The people who are in the best position to refinance are those who refinanced a year, or more ago, but it varies from situation to situation. There is quite a time gap between then and now as far as rates are concerned.
There are certain things which you need to consider before refinancing your mortgage:
Before you decide to refinance you need to make sure what the cost is. There are loans w/o cost, and loans w/ cost. Some have points, others do not. You need to talk to your mortgage consultant, and get all the options, and figure out what the “break-even point” is for the new rate. At times, it will not make sense. At other times, it makes a world of difference! Call today and see if now is a good time for you?
When you are considering refinancing you need to look at all the factors in the market. One such factor is “value” in the housing market. During the refinancing of your home, an appraiser will come out to determine what your house is worth. The lender uses this to ensure there is a good enough equity position in your home, before they will lend money. This creates a new loan to value parameter and it also may present a new financial opportunity for you.
Interest rates change daily, and from investor to investor. You need to closely monitor this with your mortgage consultant, because on certain loans, even if there is just a difference of 0.25% in your interest rate, it could make a lot of difference. Especially if you get a “credit” from the lender for your closing costs. You can then benefit from a lower rate right away. Note that you will also get better terms and conditions if you have good credit score so be sure to keep up on that.
Whether you should or should not refinance totally depends on your personal circumstances. Before you make this decision you should reevaluate each and every aspect of it, and stay in constant communication with your lender to see what might be best for you. You should check in every 6-12 months as the market continues to fluctuate. As rates move, you want to be ready so communication is key.
Many home loan applicants choose to compare rates in order to find the best loan program available.
Thus, to make a more informed decision while applying for a loan in the Bay Area, home mortgage applicants can take into consideration other factors along with the interest rate.
The Closing Costs Impact The Rate
It is important to note that lenders can increase or decrease the interest rate with adjustments to closing costs, and this means that some of the lowest interest rates available may also have some of the higher closing costs.
Sometimes, the lowest interest translates into paying more in closing costs. It’s critical that a loan applicant compare interest rates along with closing costs in order to find the best loan program available.
The Loan Term Affects The Rate
As a rule, a shorter loan term comes with a lower interest rate. Be aware that with the lower interest rate, the mortgage payment will be higher with the shorter term.
In some of the cases, the higher mortgage payment may impact loan qualifications and affordability. Call your mortgage professional to go over all options that will work for you.
The Interest Rate May Adjust
Adjustable rate mortgages typically have lower interest rates than fixed rate mortgages, but the interest rate with an ARM may adjust higher in the future.
This is a great option for those individuals who plan to own the home or to retain the mortgage for a short period of time.
However, the potential for a future rate adjustment is not always the best option for those people who plan on owning a home or retaining the mortgage for a longer period of time.
Those who are on the lookout for the best interest rates and the best deal on a mortgage, often opt for the lowest interest rate, but this is not always the best strategy.
The loan program you choose will always have options. To understand them clearly and choose the best program “for you”, call your trusted mortgage advisor.
Karen Cimera is a mortgage banker in the San Francisco Bay Area, Silicon Valley, and throughout California, and can provide assistance comparing loan terms and helping loan applicants find the best solution that is the most appropriate for their needs.
Call me with any questions!
Karen Cimera is a Mortgage Banker, NMLS# 181709 in the Northern California/San Francisco Bay Area.
Karen gives you the personal attention you deserve whether buying a new home, refinancing a mortgage or needing a line of credit. Contact her today!
Loan Star Home Lending NMLS# 1094582 – CA# 603K799
408 506 0542