Is It Worth It To Refinance? Refinancing a home loan can be worthwhile, but it does not make good financial sense for everyone in Florida. A general rule of thumb is that refinancing becomes worth your while if the current interest rate on your mortgage is at least 2 percentage points higher than the prevailing market rate. This figure is generally accepted as the safe margin when balancing the costs of refinancing a mortgage against the savings. There are other considerations, too, such as how long you plan to stay in the house. Most sources say that it takes at least three years to realize fully the savings from a lower interest rate, given the costs of the refinancing. Depending on your loan amount and the particular circumstances, however, you might choose to refinance a loan that is only 1.5 percentage points higher than the current rate. You may even find you could recoup the refinancing costs in a shorter time. When you refinance, you are getting a new first mortgage that pays off and replaces the old one. The move can lower your monthly payments and/or your overall interest bill. That's because you're replacing an older, higher-rate loan with a new, lower-rate one. Someone who is a year into a 30-year fixed rate mortgage for $150,000 at 8.5 percent can refinance into a new 30-year loan at 7 percent. Refinancing Is Not For Everyone Refinancing doesn't always make sense, though. You may not want to refinance if you're a number of years into your loan already. Someone who is 20 years into a 30-year mortgage may not want to refinance into a new 30-year loan because that leaves them paying off their homes for a whopping 50 years! How Is Your Credit? If your credit is worse now than when you originally borrowed since you bought your home, your credit score will have fallen. You may not qualify for the best rates anymore, so refinancing could actually boost your payments and interest bill rather than lower them. Equity Lines Of Credit Depending on conditions in the interest rate market, equity loans and lines of credit rates can be lower than first mortgage rates. This can happen when the prime rate is exceptionally low, as it is now. For borrowers who don't need much money and don't plan to have their loans outstanding for long, the no-closing-cost second mortgage can be a good loan choice.
The perfect source for first time homebuyers. Our goal is to make your loan experience Fast, Simple and Free with only the best Mortgage Rates. Florida Home Loan lenders with purchase, refinance, reverse mortgages, home equity loans.
Privacy, Licensing, Security