Refinancing? When is it worth it?

Questions: True or False?

1. You should only refinance if you can lower your rate by at least 1%.

False.  The 1% rule is bunk.  It depends more on what your balance is, rather than the rate.  The other major factor is how much will it cost?  It’s probably worth it to refinance if you’re only cutting your rate by ½% when you owe $400,000.  If you only owe $50,000 it’s probably not worth it to refinance—even if you can cut your rate by 2%.  You can’t know if it’s worth refinancing simply by looking at the interest rate.  You have to run the numbers to know exactly what a refinance will do for you.  If you’re doing a “No-Cost” refinance, with the lender paying all of the fees, then it may be worth refinancing for only a ¼% reduction of your rate.  Call The 801-APPROVE Team and we will run the numbers for you, show you how much you’ll save, and help you determine if it’s worth it.

2. I owe more than my home is worth, so I can’t refinance.

False.  There are several options to refinance both conventional and FHA mortgages, no matter how far under water your home is—even if you’re home is only worth half what you owe on it.  What’s more, many of these programs will not require an appraisal.  And you can do it on a no cost option where the lender will pay your closing costs for you.  Even if you no longer live in the home and are now renting it out, you can still refinance.

3. I just recently bought or refinanced, so I shouldn’t refinance.

Maybe. Even if you bought or refinanced in the last few months, you can refinance to get a lower rate and payment at any time.  With home values shooting up, you also may be able to drastically reduce or eliminate your mortgage insurance with a refinance.  If you have an FHA loan, a refinance to a conventional loan will cut or eliminate your mortgage insurance.  We have several lenders that offer purchase and refinance loans with no mortgage insurance, even if you owe more than 80% of the value of your home.  Call us and we can find the option that will save you the most amount of money.  A refinance can save you enough money to pay for a vacation to Hawaii every year, or help you pay off your mortgage years sooner—when you put the savings toward your principal balance.

4. I should only refinance if it doesn’t cost me anything.

Maybe, maybe not. You can always do a no cost refinance by choosing a slightly higher interest rate and have the lender pay all of your closing costs so it doesn’t add any to your balance.  However, if you plan to keep your home for a long time, you may save even more by paying the closing costs.  You can pay for the closing costs by simply rolling them into the loan, or you can pay them out-of-pocket at the closing.  The 801-APPROVE Team can run the numbers for you on both a no cost loan and one where you pay the costs.  Then you can decide what option works best for your situation.

5. Refinancing will take a long time and be a big pain.

True—if you refinance elsewhere, not to mention it’ll cost you more.  False—if you refinance with The 801-APPROVE Team.  Our clients only spend about two hours of total time to refinance: 20 minutes to complete the application over the phone, a few minutes to gather the documents for the underwriter, and about 30 minutes to close the loan at the end.  We shop the 20 best lenders in the country and find you the lowest rate and best loan, saving you hours of making calls on your own trying to find the best loan and lowest rate.  We eliminate all the hassle, confusion, and smoke and mirrors.  No one does what The 801-APPROVE Team will do for you.  That’s why we’re Utah’s mortgage leader.  The two hours you invest refinancing can save you tens-of-thousands.  It’s likely to be the most profitable two hours you’ll ever spend.  Now, if your employer would pay you the same hourly rate!