Are you interested in lowering your interest costs and reducing the length of your loan so that you can own your home sooner?
Too often, homeowners don’t take advantage of this opportunity when mortgage rates are low. Why? Here are some of the reasons:
Concerned about high closing costs?
- Yes, there are costs involved in refinancing. In some scenarios, however, you may be able to take advantage of a no-cost refinance. That means you don’t have to pay anything extra. For example, the lender may pay you for negative points, depending on the interest rate. The lower the rate, the fewer points you’ll get, but if the credit is high enough, it may cover all of your costs.
- The lender may cover a certain list of fees—ask!
- Separate the true costs from everything you’d have to pay anyway such as homeowner’s insurance and property taxes to escrow, etc. It may be that all you really need to pay for is the origination fees, title insurance fee, credit report fee, etc.
Concerned that you’re either losing equity or not building it as quickly?
- All your previous payments and any additional principal prepayments will be reflected in a smaller loan principal. You aren’t losing any equity as long as you’re not opting for a cash-out refinance that adds to your loan principal.
- Instead of focusing on how much money you will save each month, look at the big picture like this, for example: you could pay off your house years earlier with no change to your current payment.
- You can always send in additional principal payments—assuming no prepayment penalty exists—and build equity as quickly or even more quickly than before.
Concerned that you haven’t reached your break even period yet?
- Don’t fall prey to the sunk-cost fallacy, not taking action for fear that resources already invested will be lost. Make a decision based on what is financially best now. If you can lower your interest rate again with an acceptable new break-even period, go for it.
- Keep this in mind: look at the lowest rate that will be no cost to you. It may not be the best rate available, but it will simplify things for you. So if you can lower your interest rate without paying more outside of the necessary fees, then you’re in a good spot.
Concerned that it’s too soon since you last refinanced?
- Investors expect that borrowers will refinance when rates drop. No surprise there. You may even be able to get your appraisal waived if you are refinancing within a certain time frame.
- First check whether your loan has penalties.
Contact Golden Oak Lending today to find out if you can lower your interest rate and reduce the term of your loan. We’re happy to answer all of your questions.