Should I Refinance My Mortgage?

Whether youre a relatively new homeowner or youve been in the same place for years, you might haveconsidered refinancing your home loan before interest rates go back up. But is it right for you?

Whats Involved in a Refinance?

Heres what to expect:

• Documentation.A refinanced loan is considered a new loan. Even if you use the same bank, youll still have to supply written verification about what your earn, what you owe, where youve worked, and what your credit history looks like.
• Appraisal.Assuming you qualify for the loan, the bank will hirean appraiser to provide a written estimate of the value of your home based on location, amenities, condition and recent sales of similar nearbyproperties. The home must appraise for a dollar amount that will justifythe loan.
• Fees.Because a refinance is a new loan, there will be closing costs, usually an average of 2% to 3% of the loan. No-Fee refinance options generally make up the cost by increasing the loan balance or a higher interest rate.

Why Do People Refinance?

Usuallyfor one of four reasons:

• To lower payments and reduce interest paid
• To cash in on the homes equity in order to make home improvements or to pay off high interest loans
• To shorten theloan term and pay it off faster
• To get out of an adjustable rate mortgage

Is RefinancingRight For Me?

Maybe. The decision about whether or not to refinance is hugely dependent on your long term goals. Will you be moving soon? If so, you may not have time to recover the cost of the refinancing fees. Want to pay off the loan faster? Makesure you can afford the higher monthly payments. Want a smaller mortgage payment? You can probably get it, but may pay more over the life of the loan since your 30-year payment schedule will likely start over. And of course, discussing a refinance with your financial planner is ideal.

Take a look at this handy refinancing calculator to help you estimate how much money you could save. If youre still not surewhich scenario may be best for you, I work with partners in Katy, TX and the Greater Houston Area who can help! Contact me here or call me at (713) 515-3463, and we can point you in the right direction!

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