Low Rates – Should I Refinance My Mortgage Loan?

Author: Kim Higgins, Vice President | Mortgage Loan Officer The media is buzzing about historically low interest rates, and with good reason.   Do you have a mortgage loan on your home?   Then you have probably at some point wondered if you should think about refinancing to a lower rate.    Even if you’ve already refinanced it can sometimes make sense to do it again when the rates keep going down.   Low interest rates are good for homeowners—they can reduce their monthly payments and, in many cases, save them thousands of dollars over the life of the loan. Should you be refinancing?   Here are some things to consider: What is your current mortgage rate?    Refinancing isn’t just about getting a lower rate.     If you have an adjustable-rate loan now, you may be looking at a higher loan payment in the near future.   If you can refinance to a fixed rate, you can also fix your monthly payment and eliminate some of that rate and payment risk.   When does your current mortgage loan mature?    If you’ve had your loan for 12 years and only have 3 years more to pay, a refinance isn’t likely to net you any savings after you factor in closing costs.    You want to save more money over the life of the loan than you spend to refinance.   On the other hand, if you are at the front end of a 30-year loan, an eighth of a percent in rate could make a huge difference in the future interest you pay.   Even that, though, depends on… How long will you be staying in your home?   If you’re in a starter home and plan to upgrade in a few years, you may not be able to recoup your closing costs before you pay off your existing loan with the sale of your house.   If you’re in your forever home, refinancing could be a good idea. Do you have equity in your home?  Residential mortgage money is the cheapest you can get these days.   If you have a home improvement project, large purchase, or want to consolidate debt, a cash-out refinance using the equity in your home can get you there. This is a lot to think about.   The good news is that you don’t have to figure it all out for yourself.  Let Arcola First Bank’s mortgage loan professionals do all the heavy lifting.    Give us a call.   We can run some numbers for you and guide you to an informed decision on your options.   No charge, no obligation.     We’re here to help.