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How to Decide if You Should Refinance

[ 0 ] September 27, 2012 |


The unbelievable low mortgage rates of the past two years have generated a lot of refinance loans. However, experts indicate that borrowers need to look at the big picture and make sure it is a good time to refinance before talking to a lender.

Interest Rate vs. Closing Costs

First, you need to consider your current mortgage rate against the possible new rate that you could get. The new rate needs to be at least 2% less than your present mortgage. Next, you need to look at the closing costs. Determine how long it will take for you to recover the amount of the closing costs from the loan payment savings to see if the new loan makes sense for you.

For example, if your new house payment is $128 less than your current mortgage payment, that could be a good thing. However, if the closing costs for your new loan are $4,200 then it will take you 32 months to regain that money spent on the mortgage. Do you intend to stay in the house for the next three years?

Do You Want to Start Over?

Another thing to consider is the amount of time that you have been in the home. If you have made payments for 10 years or more, and you wish to refinance to a 30 mortgage, you are essentially starting over. You may have built up equity through time and payments, but going to a 30 year loan will actually wipe out that gain. It would be a better move to consider a 10 year or 15 year mortgage.

Make no mistake; this is a great time to look at a refinance. However, it needs to be a great time for your situation in order to get the proper benefit.

View our Refinance page for additional information and our mortgage rates page for today’s rates. If you have questions or want to see if you qualify, please feel free to contact us or apply online!

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Category: Refinance

About Aiman Abozeid:

I am the Branch Manager at Inlanta Mortgage Madison office, I have been serving the state of WI and Madison area for over 13 years, starting first with First Wisconsin Mortgage and now with Inlanta Mortgage I have focused my attention in providing my customers with a easy, painless loan process.

Inlanta Mortgage has emerged as one of the leaders in mortgage banking in the Madison area by focusing on developing relationships and creating a “value” for each customer they service. One of my firm beliefs is handling each customer independently of the next, providing knowledge, accountability, and exceptional service. Inlanta incorporates each of these characteristics in maintaining their business strategies and insuring future customer loyalty.

By working with me, you have the ability to experience a processing system right here in Madison, yet get the benefit of many different lenders and the niche’s they serve. Local service means quick decisions and closings that will happen on time. Since buying a home is one of the most important decisions of a person’s life, I have to make sure it’s a smooth and enjoyable process. I specialize in many different purchase programs from first time home buyers to move up buyers or investment properties, we have all the latest mortgage programs available including Reverse Mortgages for people over 62 years of age which is becoming a very popular loan alternative.

Aiman Abozeid
Email Me
Toll Free: 877-240-5810
NMLS ID #237450

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