when is the right time to refinance?

When is the right time to refinance?

Answer: Knowing the right time to do a home mortgage refinance depends on where you are financially and what you are trying to accomplish. It may be the right time for refinancing your home if:

• You want to lower your monthly payment and you dion’t mind if you end up paying more interest over the life of the loan
• You want to shorten the term of your loan and you can afford to pay more per month
• You want to get cash out for a home improvement project or to pay off consumer debt
• You have an adjustable-rate mortgage (ARM) and you want to convert to a fixed-rate mortgage to lock in current rate

Wondering how to refinance a mortgage with a minimum of hassle? Here are 6 mortgage refinance tips to help you choose the right refinance and complete the process smoothly.

1. Get disclosures from at least 3 refinance lenders –
Studies show that most people still don’t shop for the best mortgage or compare mortgage quotes. Taking the time to do this could save between 0.375 percent and 0.625 percent on your refinance rate. On a $200,000 loan over 30 years, that’s between $11,492 and $19,388!

2. Choose the right loan –
You could spend hours negotiating 0.375 percent off the rate on a 30-year fixed mortgage. But if you plan to move in a few years, you could knock nearly a full percent off your rate by switching to a 7/1 or 5/1 mortgage, which is fixed for five or seven years. The saving during that time could be enough to buy your next car – with cash. Or, pay down your principle.

3. Know your credit score -
More than ever, your credit score influences what you pay for a mortgage. A single point like the difference between 679 and 680 can add thousands to your loan fees. Get your credit report from www.annualcreditreport.com and purchase your scores. You can’t get meaningful refinance mortgage information and quotes without a credit score.

4. Increase your credit score –
Mortgage pricing changes at 20-point increments in your credit score: 640-659, 660-679, and so on. If you’re at 679, pay down some balances to get past 680 before refinancing.

5. Get your documents early –
You’re responsible for what you sign. Do you really want to be wading through 30 pages of boilerplate during a half-hour appointment with your title officer? Read them at home and call your loan officer if you have questions.

6. Never, ever sign anything you don’t understand!!!

A few more items to think about –

 If you have a 30 year fixed loan, one extra full payment per year pays off the loan in 18 years!
 If you have an adjustable loan and pay the principle every month with the interest, when the loan adjusts, your balance will be substantially smaller.
 An adjustable loan changes yearly after the first set time and is based upon the remaining years; i.e. 5/1 fixes to a 25 year loan rate on year 6. Also remember the yearly adjustment is based on the index rate and the margin rate of your loan.


If you have any questions, please feel free to call me!