Advice For Refinancing a Home That Many People Don’t Know

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With mortgage rates at historic lows and the upcoming election threatening to throw markets into turmoil, it’s incredibly important that you get your interest rate locked in today.  You don’t want to be thrown for a loop and miss your shot at saving thousands of dollars after the market settles.

With that said, we wanted to go over some advice for refinancing a home that many people don’t know going into the process.

Ignore the 1% Rule

Conventional wisdom used to be that refinancing wasn’t worth it if you didn’t save at least 1% on your interest rate.  It makes some sense, but isn’t always applicable.  You can definitely make money even if you’re only dropping a half point.  However, this depends on your math.

If you want to find the break-even point, look at your total savings per month and divide it into the total closing cost amount. So if closing costs were $5,000 and you saved $200 a month, it would take 25 months before you broke even with those closing costs and began saving money.)

Refinancing isn’t only for 30 year homeowners

Every homeowner has the same impetus to refinance.  It can change your math though, if you’re looking to flip your home after a few years.  Again, it’s all about the math.  Find out your closing costs and figure out what you’re saving.  It’s important to know your break-even point here, too.  Look at the example above.  You break even just after 2 years.  If you’re keeping your home longer than that, you’re making money on the flip.

Keep your options open

Make sure that you shop around.  Don’t just call your bank and ask them what to do.  You need to compare rates across different lenders.  Let the mortgage companies do their job and find you the absolute lowest rates for you.  It’s your money, so find who treats you the best on your mortgage and go with them.  You’re not locked to your bank for your mortgage, and you aren’t stuck with the mortgage company you started with, either.  Make sure you’re paying the least possible money every month.

And different types of mortgages can help you save.  If you have an FHA loan, and have 20% equity in your home, you can refinance to a conventional loan and save yourself the PMI.  You can refinance a HARP loan if you meet the criteria.

Get Started

Call The Home Loan Expert, Ryan Kelley and take advantage of lower mortgage rates to buy your home or refinance and save money. Call us in St. Louis at (314) 781-9700, Chicago at (773) 770-4727, Indianapolis at (317) 550-1515 or Nashville at (615) 810-8555.  You can always apply online at www.thehomeloanexpert.com, and we’re also open on Saturdays to better serve you. Don’t forget to follow @TheHomeLoanEx on Twitter for breaking mortgage news and knowledge.  Nobody gets lower rates on better loans than The Home Loan Expert, Ryan Kelley, why go anywhere else?