Right Time to Refi?

Home Loan rates have fallen recently  and while it’s tempting to see what kind of a deal you can get to refinance your home, take a moment to learn why there’s more to refinancing than just the interest rate.

Law scales with house model and piggy bank on table background.
To Refi or Not to Refi?

Why are you interested in refinancing?

Lower rates, smaller monthly payments and fixed rates are all good reasons to consider refinancing your home. Even if your mortgage rate might go up, it’s probably a good bet that that rate is lower than many other types of debt, especially credit card debt. Determine your goals for refinancing first. Then PCCU can help you figure out the type and terms of the loan or budget strategy that will help you achieve your financial goals.

Is the timing right?

You may have purchased your home when your credit score was much lower than it is now. Refinancing with a higher credit score rating could yield better rates and terms for you. Also check your property value – a variety of websites are available to estimate your home’s value. Your property value may have increased since you purchased your home, giving you equity to potentially use. On the contrary, if your credit score or property value has decreased, you may want to hold off on refinancing. It could end up costing you more in the long run.

Can you recover your costs?

If you are looking to lower your monthly payment with a refinance, it’s important to know if you can recoup the refinancing costs. When you refinance your mortgage, you will end up paying similar costs to the ones you paid when you bought the home – appraisal, credit report, closing fee, underwriting and processing fees. Consider if it’s worth paying these costs to reduce the amount of your monthly payment. A good method is to divide the total cost to refinance by the amount of money you are saving each month in your payment – this is how long it takes to recover your costs. For example, if you are paying $2,000 to refinance and saving $100 per month, it will take you 20 months to recover. Make sure you plan on living in the home at least that long or you will be wasting your money.

Amy Clark PCCU home loan expert aclark@pccu.com 765-960-8618 NMLS# 488199

As your credit union, we offer a variety of mortgage products to help you with your refinancing needs. If you’re considering refinancing your home, we welcome the opportunity to speak with you about your financial goals. Our mortgage expert, Amy Clark, can help you determine the next step in the refinancing process. And we’ll be honest with you – if now isn’t the right time for you to refinance, we’ll let you know. We’re here to help you do better – that’s our number one goal. Email or call Amy Clark, PCCU’s home loan expert, at 765-960-8618 today and find out if a refinance right for you!