Refinance that Mortgage
Last week we talked about buying down the rate. When it comes to saving money, don’t forget about refinancing. Seems hard to believe that there are people out there who are paying high rates on their mortgage and they haven’t refinanced. The world has changed. Interest rates have declined for 30 years. The low rates of today should be a trumpet call to get your rear to a bank and refinance. Here in Cedar Rapids, a 7% 30-year mortgage is golden paper to a lender and a massive overpayment of interest for you. Rates are currently below 4%. You can save a considerable amount of money if you refinance that mortgage.
Refinance that Mortgage
Refinancing means adjusting the terms of your mortgage. You can adjust your mortgage to pay more per month so that you shorten the life of your loan. Or you can adjust your mortgage to pay less per month and lengthen the life of your loan. Some borrowers refinance to take money from equity for special projects, finance education, buy a second home or pay off debts. Because of our over the moon low interest rates, depending on the original rate and the time you have been in the house, you can take out money, extend the term of the loan, and end up with the same payment as before. If you have 15 years left on the mortgage, there’s no need start at the bottom of the hill all over again with a 30-year mortgage; you can refinance with a 15-year mortgage.
Chase writes on their website, “When interest rates drop, or home values rise, it may be a good idea to refinance your loan. When you refinance that mortgage, you can lower your monthly payments, reduce the total interest amount or even put your home equity to good use.
Whatever your reason for refinancing, you will have to apply for new credit through a bank or mortgage broker or real estate investor.
Here are the elements that will determine the rate you will receive
- Loan size
- Your FICO credit score
- Paid points
- When is the closure of the loan?
- Fixed or floating rate
- Debt to income ratio
Keep in mind that refinancing involves closing costs that can soak up some of the savings from a lower mortgage rate.
Know the costs associated when you refinance that mortgage
It probably doesn’t make sense to refinance if the costs and fees associated with refinancing are bigger than the amount of money you save after refinancing. Figure out upfront how much you’re likely to be charged for refinancing. It is not uncommon to pay between 3% and 6% of your principal in fees. Some possible fees you could face include:
- Application fee: $100 – $300
- Appraisal fee: $300 – $700
- Loan Origination fee: up to 1.5% of the loan principal
- Points: up to 3% of the loan principal. One point is equal to 1% of the total mortgage amount.
- Inspection fee, Attorney Review fee, Survey fee, and Title Search and Insurance fee: $1,500 – $2,500
You can see why banks like the refinancing business. Some lenders may even charge a pre-payment fee designed to compensate the bank for the loss of that 7% mortgage. One personal comment: it used to be the goal to have a party when the house was paid off. The party was to witness the tearing up of the mortgage. The older you get, the more burdensome is the mortgage payment. In this high debt nation of ours, maybe we should bring back those good old days.
Harmony Property Solutions, LLC is here to help homeowners out of any distressed situation.
As investors, we are in business to make a modest profit on any deal. However, we can help homeowners out of just about any situation, no matter what! There are no fees, upfront costs, commissions, or anything else. Just the simple, truth about your home and how we pay cash for houses Cedar Rapids.
Harmony Property Solutions, LLC is part of a nationwide group of thousands of investors who are helping tens of thousands of homeowners every year. We may not be the “traditional” route, but we CAN help, and we can do it quickly!
Give us a call today at 319-343-6773 to let us know how we can help YOU.