Things To Consider Before You Refinance

Posted on December 6, 2017 · Posted in Connecticut Mortgage Refinance, FHA Streamline

Current interest rates are still very low.   For many homeowners here in Connecticut it may make sense to refinance their current mortgage. If you think you could benefit from a refinance there are a few things to consider.


Are you going to be lowering your interest rate?  The rule of thumb says you want to lower your rate by at least 1%. When you lower your interest rate you also lower your monthly payment.   You save not only on the monthly mortgage payment but possible tens of thousands of dollars on the interest over the life of the loan.


How much are the closing costs?  The costs usually include an appraisal fee, attorney fees, title insurance, lenders fees such as underwriting and processing, and costs to set up new tax and insurance escrow.


Should you shorten the term of your mortgage? Most mortgages are taken out as 30-year loans. If you qualify and can afford the payment it may make sense to refinance into a 20 or 15-year mortgage. The rate is usually lower than a 30-year mortgage and your overall savings is much greater.


Do you have enough equity in your home to do a refinance?   Most people who are buying their first home put very little money down. As a result it takes time to build up equity in their home. This can be a roadblock if your home has not gone up in value. However there are programs designed specifically for people with little or no equity. HARP (Homeowner Refinance Program) allows people who have government backed mortgages to refinance even if they have little or no equity.  If you have a FHA or USDA mortgage  you can also streamline the loan – meaning no appraisal is required (which usually means the equity in your home is not a concern).


These are just a few things to consider when refinancing your mortgage. Rates continue to stay at historic lows – so for many it makes sense to refinance.


Call me today for a free consultation on your options.





Drew Raney/NMLS#117309
President of Northeast Financial
210 S. Main ST. Middletown, CT


Company NMLS#117273


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