Each client is a unique case, but surely you have asked yourself, is it in my best interest to refinance my home? First, we must delve into the concept of refinancing, this means obtaining a new mortgage to replace your current loan. There are multiple reasons why clients decide to do this, either to lengthen the payment term and lower the monthly expenses or to get more out of the mortgage and obtain money. In conclusion, refinancing is like buying your house again but with a completely different loan. Doing it to extend the payment term is not advisable because you will have to pay even more in interest.
You should only do it if you want to take advantage of a lower interest rate or shorten the term of the loan. Talking numbers is the best way to find out how much it costs to refinance a mortgage and keeping in mind that it is not cheap: the closing costs of the mortgage fluctuate between 3% and 6% of the value of the new loan which would be approximately $5,000 although these vary depending on the state where you are. It is possible to save some money by negotiating the closing costs and talking to the lender about it is a good option to get the money in your bank account.
In conclusion, refinancing a mortgage has many benefits, such as a lower interest rate and monthly payment, if the refinancing costs outweigh the savings it may be better to stay with the mortgage you currently have. Having the costs and percentage rate that will be in effect is important when making the final decision, ask yourself the necessary questions and get an agent to answer each of them so you can make the wisest decision for you, your finances, your family, and your home. Refinancing your home is not an act to be taken lightly, it is best to find a balance point.