Much like purchasing a house, deciding to refinance your home is a big decision. That's because the process that comes with closing on a home is more or less the same process you have to go through when you're refinancing. That is to say, you are once again required to submit an application, have your credit checked, get a new survey and title search, and there's always the fees for a new appraisal and inspection.
But fear not, the two things you really need to know are fairly simple. It's important to know how long you plan to keep living in the house and how much everything will cost in the end.
As an example, if you were to save $200/month by refinancing, but it cost you $2,500 in refinance fees, it's going to take you 10-12 months for you to enjoy those savings. This means that the longer you plan to stay in the house, the more money you'll save in the long term, but if you plan on selling in the near future you've just lost money.
Here are a few fees that comes with refinancing:
- State/City/County Stamps (3)
- Title Insurance/Search/Endorsements (3)
- Credit Report
Simple rules of refinancing:
- Refinance if you're trying to reduce your monthly payments and can lower your interest rate.
- Refinance if you want to reduce the term of your loan and overall cost of the house.
- Refinance if it helps to consolidate uncontrollable debt.
- Refinance if the interest rate is two percent lower than what you're paying, currently.
Now, these aren't hard-and-fast rules as every situation has its own elements involved. Knowing how much money you'll save in the long run and how it will impact you in the present are questions that you need to ask yourself. Contact me today for a consultation. I will be happy to answer any questions you may have, and/or help you determine the value of your home.
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