Refinancing your home in Albuquerque could be a smart financial move, especially with the current lower mortgage rates. Even if you already refinanced your home just a year ago, it’s worth considering if you can save money by refinancing again. Take the time to research and compare lenders to find the best option for your situation.
Yet you should consider more than just the rates if you decide to refinance your home. Here are some points to consider.
How much will it cost?
Lowering monthly payments through refinancing can seem like a great idea, but it’s important to consider the associated fees. Take the time to account for all fees and negotiate with your lender where possible. It’s also crucial to calculate the break-even point to determine if refinancing is truly worth it in the long run.
For example, if you pay $3,600 in fees to save $100 a month, it will take 36 months to break even ($3,600 divided by $100 equals 36). So if you plan to stay in your home longer than that period, it will be worth the effort to refinance.
Consider the terms
When considering a home loan, it’s common to opt for a 30-year term. However, it’s worth exploring the option of a 15-year loan to pay off your home sooner. Additionally, if you have an FHA loan, switching to a conventional loan could eliminate the need for mortgage insurance and save you money each month. It’s important to thoroughly examine all of your options before making a decision. You never know, you may find a better option that you haven’t considered yet.
How’s the service?
An important part of the refinancing process is getting your questions answered accurately and in a timely fashion. A loan requires a lot of paperwork, as you no doubt remember. You need to find a company that offers a single, reliable point of contact to answer all of your questions.
A conventional loan isn’t your only option.
If you currently have an FHA loan, you can look into refinancing with what’s called an FHA streamline. This is an easy way to get a lower rate without jumping through all the normal hoops.
With an FHA streamline loan, the lender doesn’t have to verify your income or credit, and there’s no home appraisal. That means a Streamline Refinance closes faster than other loans and has slightly cheaper closing costs. This type of refi is also available through the VA and USDA.
Did you get a second opinion?
Even if you go back to your current mortgage lender for your refinance, shop at least a couple of other lenders to see how interest rates and terms compare. You might believe that going to your existing lender will save you time and hassle. ‘They know us, they’ve already got all of our paperwork,’ you may think. If only that were true. It’s a new loan for them, just like it’s a new loan for any lender. The paperwork will be the same. When lenders know you’re shopping around, they are more likely to compete.
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