Mortgage and Finance Guide
We have articles and information about buying a home, choosing the right mortgage and getting settled into your new home. Whether you're just beginning to look for a home or you're just about to close you'll find information that fits your situation in our home buying resource section.
When Should You Refinance a Mortgage
Should you be thinking about refinancing? A lot of people jumped on the recent all-time low rates, but just because mortgage rates are low doesn't mean you should be refinancing. When should you think about refinancing? If you can get a low interest rate and keep a short term on your loan, it might be time to consider refinancing. When refinancing, shop around and compare points, fees and the interest rate being charged.
The key question to answer is how good is your credit? If your credit score is above 760, you may be able to get an interest rate that is quite good. Will it be 4.25 percent for a 15-year loan? That depends on where rates are the week you refinance.
Recently, mortgage interest rates fell temporarily to 4.25 percent for a 15-year fixed-rate loan and 4.75 percent for a 30-year fixed-rate loan. Unless you bought down the rate (which I wouldn’t advise), there is no chance you can down to 4.25 percent on a 30-year fixed-rate mortgage.
Interest rates stayed at these 50-year low levels for about two weeks, before climbing on positive economic news.
Let's assume you and your spouse have an extremely high credit score (or high enough to qualify for the best rates). If you're only going to be in the house for 2 years, it probably won't pay to refinance unless you cut the length of your mortgage term to 15 years. Most lenders will charge you for certain costs when you refinance a loan, these cost can be around $2,000. If you sell within a couple of years, you might not recoup those refinance costs. If you take a higher rate instead of paying those costs, you might find that the difference in the rate you currently have and the new rate might be about the same.
How Much Can I Afford?
It's the question you need to ask yourself before you even BEGIN your new home search. It's the most important factor in determining what kind of home you can secure and where you can begin to look. It's a crucial consideration for first-timers and veteran home buyers alike: How much can you afford to spend on your next or first home?
