Refinancing Blog Post

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Even If You Do Plan On Selling Your Home, Should You Refinance?

You may be interested in refinancing your home loan, but unsure what to do so because you’re thinking of selling your home at some point. Refinancing could still make sense and here are a few reasons why you might want to consider it.

1) Your Family’s Financial Situation Could Change
You planned to sell your home in around seven to ten years but no matter how well you planned, things happen. For example; major income losses or unexpected expenses inevitably get in the way of your plans. The longer the time before selling your home, the more chances there are of life putting roadblocks in the way. If refinancing can save you money in the meantime, it may just make sense. Our advisers can help you determine the pay-back time required to justify the costs, if any. Special low cost or no cost refinancing may be available.

2) Take Advantage of Lower Interest Rates Before They’re Gone.
Mortgage interest rates have started their way up and are hovering just under 4%. The latest predictions by experts are showing continuing increases. If you don’t sell the property in the time frame planned or if there’s a market crash- as in 2008, and you have not refinanced… is your current home loan payment something that you can afford to pay over the long haul? If you could save money now, it’s probably worth investigating.

3) Facing a Higher Payment on Your Adjustable Rate Mortgage
Interest rate indexes are likely going up still more later in 2015, and the subsequent recalculation of payments on adjustable rate mortgages and home equity lines of credit will affect many home owners. A typical home equity line of credit (HELOC) is similar to an Adjustable Rate Mortgage (ARM) with a fixed period for the interest rate, followed by rate and payment adjustments. For a HELOC, payments may be interest-only for the first 10 years. After 10 years, the loan rate adjusts, and for the remaining years the loan payments are both principal and interest until the loan is paid in full. A major payment increase then will happen after the first 10 years.

If you plan to sell your home down the road and you have a first mortgage along with a HELOC, it might make sense to roll the first mortgage and HELOC into a new first mortgage, thereby saving money until you sell.

4) You Want to Get Rid of This Additional Mortgage Cost
One mortgage cost home owners hate is Private Mortgage Insurance (PMI). PMI is typically charged when you have a lower than 20% down payment on the purchase. PMI protects the lenders against payment defaults. You can rid yourself of PMI if you have 20% or more equity in your home, or if you can qualify for a PMI-free mortgage loan program, you’ll save money. PMI can be several hundred dollars per month in most instances. If you have the 20% equity needed to refinance a new loan with no PMI, but decided to not refinance because the paperwork is too intimidating, you’re throwing money away.

Who can help me?
Weighing out the pros and cons of a refinance in conjunction with selling the home is your decision. Our mortgage professionals should be able to suggest mortgage options in alignment with your financial goals and objectives, which can help you make the best decision.