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Is It Time To Refinance?


Mortgage rates are falling more steeply than they have in years, and millions of homeowners across the nation are in a uniquely advantageous position to benefit from a home refinance. With mortgage rates at their lowest point in the last two years, now is the right time to think about refinancing. If you are a new homeowner who has purchased in the last two years, rates are better than when you bought your home. If you are thinking about taking equity out of your home for repair or renovation, then now is a great time to access money at a low interest rate.

Here’s what you need to know about refinancing your home in the current market:

Mortgage Rates Are Down

As stated, right now mortgage rates are falling, so it’s time to jump on the refinancing boat if you’re thinking about taking advantage of this market downturn. At this point, refinancing from a 30-year or adjustable rate mortgage (ARM) to one with a lower interest rate can cut your monthly interest payments by hundreds of dollars. Right now there are nearly 5.9 million borrowers who could see their rates drop by refinancing, with a total of $1.6 billion in monthly savings—that’s a lot of money that could be better spent on other things, like a new car, a home remodel, or even a vacation.

Is Refinancing Right For You?

Here are a few things to consider if you’re thinking of refinancing:

  • What’s my break-even point?
  • What fees will I incur?
  • What are the terms of my new loan?

The biggest thing to consider when you’re thinking about refinancing is, of course, your break-even point. Lenders define net tangible benefit as being able to recoup your costs within the first three years of the new loan. You’ll want to do the math first and ensure that your refinance will pay for itself, and how long that process will take. From the fees associated with refinancing to the terms of your new loan, ensuring you’ll actually save money throughout the process is the first step to doing it right.

Types of Home Refinance

If you’ve done the math and counted your pennies, and you feel ready to take advantage of the current low interest rates and refinance, there are still some choices you have to make. There are two major types of home refinance: Rate-and-term refinancing, which is used to pay off the balance of the previous loan only, and cash-out refinancing, which is where the new mortgage covers more than what you owe. The balance can be used to renovate or to settle other debts. In a rate-and-term loan, you can also choose between adjustable and fixed rates and possibly lower or remove mortgage insurance if you have it.

Refinancing can be a challenging process that involves a lot of concentrated time and effort, so make sure to do your homework ahead of time. Ensuring you have all the necessary paperwork, understand your options, and have an expert mortgage lender like Park Place Finance to guide you through the process can ensure that you’ll be walking out the door satisfied that you’re getting the best deal possible on your mortgage. If you have questions about the refinancing process  (like when is the right time to refinance?) or need a helping hand to get started, just let us know.

Justin Hubbert

Justin began his lending career working for a Lending Tree Affiliate and Chase Bank for several years before opening Park Place Finance in Austin, Texas in 2007. With expertise in condo project approvals, working with self-employed borrowers, and Texas Cash Out loan regulations, he has originated over $110 million in Conventional, FHA, and jumbo residential loans.

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