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Does it Pay to Refinance?

With interest rates at historic lows, you may be wondering if this is the time to refinance your home loan. While it’s hard to say “no” to super low rates, refinancing may not always be in your best interest. Here are some things to consider when deciding whether or not to refinance:
  • How low is the rate? When you factor in closing costs and fees, a fractional rate reduction may not save you any money. Your mortgage lender can crunch the numbers and help you determine if refinancing makes sense for you based on today’s rates and the rate you’re currently paying.
  • How long do you have left on your current loan? If you are in the “home stretch” and only have a few years left on your mortgage, you probably won’t want to refinance to another 30-year loan.
  • Are you planning to sell? If your plans include selling your home in a year or less, refinancing probably doesn’t make much sense. Typically, it pays to refinance only if you will be in the home long enough for the amount you save in interest to cover the cost of refinancing.
  • What will it cost to refinance? If you’re hoping to ease your financial obligations by refinancing, you should consider the associated costs. Appraisal fees, title fees, underwriting fees, application fees, pre-paid escrow costs and other costs need to be paid by you at closing. Refinancing might not make sense if these fees would further stress your finances.
With the right combination of rates and terms, refinancing could save you big money over the life of your loan. Our loan officer can help you determine if refinancing is right for you, and we offer a variety of terms to meet your unique needs. Contact Fidelity Bank Mortgage today to see if refinancing makes sense for you.
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