By Mike Miles
Mortgage rates can be both boring and attractive. Chances are strong that if you have a conversation at a party concerning mortgage rates (in general) you probably won’t be invited back. That said, if you say something about rates being the best they’ve been in the past two years … well then you may at least get a party-goer (or two) miming for you to text them as you get escorted out of the party.
What people really want to know is … should they refinance? My answer is … yes!
I get it, most anyone reading this will have the thought of something like this…“of course Mike would say ‘yes’ because he owns a mortgage company.” Additional business is always great, but I’m answering “yes” for other reasons. Mainly…is there a great argument not to refinance?
In some cases, there are great reasons NOT to refinance. Those might include things like:
- You’re planning to sell in the next 12 months
- Your job relocates you frequently and you aren’t sure if you will maintain ownership of your house when relocated
- You have a divorce that’s pending
- You only have five to nine years left to pay on your mortgage (meaning you’re paying almost all principle at this point).
Most homeowners don’t like the idea of refinancing because it involves costs, time, and effort. The perception is that it’s going to be a pain in the butt and an aggravation making it not worth the savings.
In most cases, a refinance probably costs about $2,000 to $3,000 depending on different situations. Expensive? I’m not able to make that decision, but I do consider it a healthy amount of money.
However, with a refinance, you’re able to miss at least one and possibly two payments. It’s quite common for homeowners to have mortgage payments in excess of $1,500. In fact, a $300,000 home with 20 percent equity would probably have a payment close to $2,000 (with taxes and insurance) on a 30-year note. My point being that if you are missing one or two payments, you can pay for the cost of the average refinance.
That leaves time and effort as the potential roadblocks. There is a difference between working with a great lender and a not-so-great lender. Great lenders turn these roadblocks into speed bumps (at most).
Here are a few of the many great reasons you SHOULD refinance:
- You can reduce your rate by .25 percent or more
- You can reduce your mortgage term without increasing your payment by more than 10 to 20 percent
- You can take equity out at a fixed rate lower than any other borrowing source
If any of these apply to you, it’s worth it to strongly consider refinancing. When I say strongly consider … I mean to get in contact with a great loan officer at a great company to review your options without any pressure.
This weekly Sponsored Column is written by Mike Miles of Fountain Mortgage. Located in Prairie Village, Fountain Mortgage is dedicated to educating, and thus empowering, clients to make the best financial decision possible for their situation. Contact Fountain today.
Mike Miles NMLS ID: 265927; Fountain Mortgage NMLS: 1138268