Should You Refinance?

Refinancing Irvine CAAsk Yourself These Questions Before Refinancing Your Home

As you cut your mortgage check, it might be tempting to daydream about refinancing for lower interest rates or shorter terms. In many cases, that dream can become a reality making your mortgage more sustainable for you. Before you jump to refinance, though, make sure you consider these questions.

  • Can I pay the closing costs? Refinancing your loan is not free. Even in a “no-cost” refinance, the expenses of closing are just rolled into a higher interest rate. When considering refinancing, plan to pay about the same amount of closing costs you did when you first purchased your home. Make sure you budget for a new title policy, lender’s fees, and other associated expenses.
  • What kind of loan do I have? If you have an adjustable rate mortgage or hybrid mortgage, the cost to refinance will likely be well worth it to you. Interest rates have been historically low in recent years, but experts say they will rise in 2015 and continue to do so. It will serve you well to refinance and get a fixed rate.
  • How long will I be in this home? A good rule of thumb when considering refinancing is to be sure you will be in the home at least three years after you refinance. That way, you will have time to recoup the closing costs.
  • Have I done the math? In recent years, mortgage lenders said it only makes sense to refinance if you can lower your interest rate by 2 percent. You have the power to determine if this rule should actually apply to you. Calculate how much you will save with a lower interest rate and determine if the time it will take you to recoup your closing costs is realistic for you. If so, you should refinance.

If you are looking for a guide to the world of mortgages, contact Avis Lending today. Serving Irvine, California and Lahaina, Hawaii, our team of home loan experts is here to meet all of your mortgage needs. Give us a call!

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