When to Refinance

If you already own your own home, then it is possible to refinance that home at any time. In fact, refinancing your home could save you money overall. However, it’s important to weigh the costs with the benefits before starting your application. Here’s what you need to know.

You Could Save (a lot) of Money

If rates are lower now than they were when you financed your home, a refinance could make sense. Just a one percent drop in your rate could save you over $100 per month. But, with some refinance loans costing upwards of $6,000 or more in costs and fees (including the loan application, title search, appraisal, loan origination, and credit check), it could take several years to recoup your costs.

Another way you can save a lot of money is by refinancing to a lower rate and a shorter term. You might not lower your monthly payments, but going from a 30-year conventional loan to a 15- or 10-year loan might save you tens of thousands in interest payments.

Cashing Out is an Option

Depending on when you last financed your home and the overall market, you could have some serious equity in the property. When you refinance your home, you may be able to finance the full value (or a percentage of the full value). Anything above what you currently owe on the mortgage is considered equity. You can choose to take that equity in cash. It’s a nice way to finance a remodel, college education, or other expense.

Read the Fine Print

Thanks to the Federal Truth-in-Lending Act, anytime you are in the process of refinancing a mortgage, the lender must provide you a written Loan Estimate that clearly states the APR (annual percentage rate) and other costs. This helps you decide if a refinance makes sense for your current financial needs. Before choosing a lender, ask if their application processing fee is refundable. If you do not qualify for the loan, some lenders will still keep this fee as part of their cost of doing business. 

Mortgage Refinance Calculator

Use our home refinance calculator to crunch the numbers on different scenarios to see how much you could save on interest and what your new monthly payment could be.

Is it time for you to refinance your home? Still not sure? 

The Rivermark mortgage experts are available to answer your questions about refinancing at any branch or over the phone at 503.906.9497.