08/08/2013: Should You Refinance Now?
With record low mortgage rates, the time could be right to refinance your mortgage and save a bundle. In today’s market, you can get low interest rates, reduce your monthly payment or opt out of your adjustable rate mortgage (ARM) for a historically-low fixed rate mortgage.
Is refinancing right for you?
Get a sense of current rates, consult mortgage calculators, check your credit rating, and make sure you aren’t significantly “under water” on your current loan to property value.
Consider more than just the interest rate.
Mortgage refinancing rates may vary based on many factors, including the lender, your credit score, amount financed, duration of your loan, loan type, and more. Be sure to look at the whole picture: Consider fees, terms, the quality of service and how well your lender knows your area housing market. If you ever have a problem, who will you call?
Downsize your jumbo mortgage loan.
Chances are, if you’ve been in your home a while, you may now qualify for a conventional loan rate. At Bank of Oak Ridge, loans up to $500,000 qualify for non-jumbo financing (while most other lenders classify loans over $417,000 as jumbo loans).
How much can refinancing save you?
A good rule of thumb is to only consider refinancing if you can save 0.5% to 1% or more over your current mortgage rate. Since many people who bought their homes several years ago may have mortgage rates at 4% or higher, it could be a good time to consider refinancing…if you plan to stay in your home another few years.
Consider the closing costs.
Be sure to factor in the break-even point for your closing costs: How many months will it take to recoup your closing costs? Even deals that are advertised as having “no closing costs” charge you in some way for loan expenses, which may include home appraisals and attorney’s fees.
According to consulting firm Accenture, many of the nation’s largest mortgage lenders are taking more than 70 days to complete a refinance. So, it’s no surprise that trusted community banks like Bank of Oak Ridge are popular choices for refinancing.