Today’s interest rates are the lowest we have seen in ages & a perfect opportunity to either refinance or purchase a home. Some people want to refinance to convert their adjustable rate to a fixed rate or lower their current interest rate in order to reduce their monthly payment. Others may choose to do home improvements or consolidate debts. Regardless of what you want to do, consider what it will actually cost you to refinance and determine if it would be worth your while and a true savings in the long run. There are cost involved when refinancing, such as transactions fees, points and closing costs. . Your lender can tell you what those fees are. In most cases refinancing is very much like the process you went thru when you purchased the home. The lenders will take a look at your credit history, work history, your income verses debt ratio and so on.

One of the most important things to consider before deciding is to think about how long you plan on staying in your home. If you plan on keeping your home for a long time but want to pay it off in a relatively short amount of time, you may want to consider a short term fixed rate loan. Although your monthly payment may be higher, you will save money on the interest. This idea may also work for you even if you only plan to keep the home for 3-5 years. Why pay for a long term rate (i.e. 30 years) when you don’t plan on being there that long?

Although you may want to refinance just to get a better a rate and lower your monthly payment, the application and qualifying rules still apply. In order to take cash out you must have some equity in the home. In some cases, if you don’t have enough equity and the loan amount is more than 80% of the homes value, you may not reap the benefits you initially thought you would.

As with any big decision, you should talk to a professional before finally deciding. Contact a lender to determine what the fees and costs would be to refinance, and consult a Realtor to determine the value of your home.

Terrie Hunt , Broker / Owner
River Ridge Realty
(916) 663-6300. “Outstanding Life Member” of the Sacramento Association of Realtors.
DRE #01213387
www.RiverRidgeRealty.net – Success and Experience Working For You