The Alternative Press

Far and away, this is the most common question I am asked on a daily basis. Given the recent historically low interest rates, it is a question on every homeowners mind.

Yet the interest rate is only part of the equation, hence a simple lowering of the rate does not always dictate that a refinance is in your best interest. Every refinance has inherent closing costs to keep in mind, and the recapture of these costs, by way of monthly savings, should be carefully reviewed. Another important factor is your future intention for the home. Will you remain in the home long enough to recapture the costs of the refinance?

Obviously there are several factors to consider, and everyone is different. I would say that most homeowners I assist with a refinance of their home are recovering their closing costs inside of 12 months, saving several hundred dollars each and every month.

Other homeowners maybe more interested in long term, substantial savings, and they are more inclined to possibly lower the interest rate, but more importantly, shorten the term of their loan. An example of this that I see fairly often is a home owner that currently has a thirty year mortgage, maybe they are five or so years into the loan, and they refinance to a new loan with a term of only 15 years. Shortening the term from a 30 year loan to a 15 year loan will save tens of thousands of dollars, many times I see savings of over one hundred thousand dollars.

A huge mistake is simply perusing the internet until you find a lender that is offering an interest rate lower than 90% of the other lenders, as if they have a secret stash of money to lend to home owners and home buyers. Instead, sit down with a local lender and review your refinance options face to face. Take the time to build a lending relationship with someone you can trust, and someone you can turn to with any questions you have regarding your refinance, or any other home financing needs.