Tuesday, October 19, 2010

When’s the Right Time to Refinance Your Home?

You may hear news reports that banks aren’t lending right now, but that really isn’t true. There are plenty of homeowners taking advantage of the low interest rates currently offered to refinance their homes. Is it something you should consider?

You should always compare advertised rates at any bank. If you can lower your mortgage by at least half a point, it may be time to refinance your home mortgage. If you can reduce it by two points, then it is almost assuredly time. Also, if you currently have an adjustable mortgage interest rate that is a half to two points above the fixed current rates, the time might be right to refinance your home mortgage into a fixed rate. PyraMax has an easy-to-use calculator on its website that may help you decide what to do.

Make sure you speak to a loan officer who can confirm the lender’s advertised rate. Ask to have the advertised loan rate mailed or emailed to you for your records.

Randy Reese, a mortgage loan officer at PyraMax Bank, says you should also take a look at your unpaid balance. Do you have enough money to close? If the closing costs are going to cost more than what you can pay back in a year, maybe re-financing now isn’t the right time. The typical closing cost is $1,200 and some larger banks charge at much as $1,650. If you can save as much as $1,500 a year in mortgage payments by refinancing, maybe now is the time.

And lastly, consider how long you plan to be in your home. If you think you will be living there a long time and your interest rates are a little high, you may want to refinance.

One of the biggest advantages to coming to a community bank like PyraMax is that you can typically get answers to your questions right away, the fees are lower, and you get local servicing. And even if the bank is local, banks like PyraMax can broker mortgages to larger banks or financing companies, which gives you more flexibility with lenders.

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