Is the Time Right to Refinance?
Sunday, August 27th, 2006
Many homeowners understand that they need to refinance, but many through mistiming refinance at the wrong time. Refinancing your home isn’t alwaya easy. Many people think just because rates rates have been low, that it’s now or never and that couldn’t be further from the truth.
In an article we published recently called Knowing When to Refinance Your Home, we discuss the “when” to refinance. You see there are more factors than interest rates at play here. Here is a list of factors that affect whether you should refinance now or wait.
- When did you refinance last? Have you done so in the last 4-5 years? If so, you may be better served waiting another few years.
- Broker fees. If you have to use a mortgage broker over a traditional bank, you are likely to pay higher origination fees on the refinance.
- Interest rate. Just because you see a 6.35% rate advertised, doesn’t mean you will get that rate. If you have had credit problems in the past 7 years you could be charged anywhere from 7.5% - 12% or even higher in extreme cases.
- Equity in your home. If your home is new or recently purchased (4-7 years) You may not have the equity builtin yet to do a refinance. If you are in an area where growth has been booming, refinancin now (and taking cash out) could leave you in a negative equity situation if values drop.
Compare your choices. It the time is right move forward, if not don’t be afraid to wait it out.
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