With interest rates beginning to move upward and the economy slowly picking up, many home owners in McAllen are thinking about refinancing. The talk is that now is the time, and if a home owner waits much longer, it will be too late. How can a home owner know for sure if refinancing is the path to take or if it is a good idea to wait and perhaps refinancing next year?
Who Should Refinance Their Mortgage?
To begin with, there is no right answer for everyone. It depends upon your financial situation and numerous factors involving your home and mortgage. The best way to go about determining if you should refinance is to look at the major factors and decide how it applies to your finances.
Every issue that relates to refinancing your mortgage is predicated upon the assumption that you plan on living in your home for several years to come. That said, the first factor is interest rates.
Can You Get a Lower Mortgage Payment?
Assuming that you are not trying to cash-out any equity in your house and you only want to refinance the balance of your mortgage for lower monthly payments, it is simply a matter of looking at your monthly payments now and comparing that to the monthly payments with a lower interest mortgage.
However, keep in mind that you must look at an interest rate that you qualify for. Lenders will advertise low rates, but they are not offered to everyone. Only those with the best credit ratings receive them. If your credit rating has changed since you first took out your current mortgage, it will affect your interest rate. Also, if you have been paying your current mortgage for a few years, you may be able to extend the mortgage length as well as get lower interest rates.
What are the Costs to Refinance in McAllen?
Once you know how much extra money you will save each month, you will need to determine your closing costs. These average about 1.8 percent of the loan. You can easily calculate how many months it will take before you begin realize a savings. Another factor to consider is eliminating private mortgage insurance.
If your home has increased in value, your new mortgage may be less than 80 percent of the value of the home and you will not be required to carry the insurance. This will lower your monthly payments considerably. PMI will cost around one percent of the total mortgage per year. This could be up to a couple of hundred dollars a month.
Contact Paul Morales today to discuss refinancing your home.