Your Mortgage: Tis the season to refinance

It’s that time of year again- the season of giving where many of us splurge, going overboard buying gifts for family and friends. But what about yourself? Be a little selfish this year and give yourself the gift of a refinance. Don’t roll your eyes just yet! You may be one of many who think it’s not worth it to refinance, but I encourage you to actually look into it further. A refinance loan is the gift that keeps on giving (another line from the same movie quoted above) … well at least for 30, 25, 20, 15 or 10 years depending on which loan term you choose.

Your gut reaction is probably to think that either your current mortgage rate can’t be improved upon or that the cost of refinancing is too much. I’m not going to suggest it’s not fair to think that way, but I will suggest you give it some more consideration.

Did you know that even a slight rate reduction, such as .375 percent, can save you over $20,000 in payments? Did you also know that the typical cost of a refinance is about equal to one month’s worth of a house payment? Did you know that you can skip up to two house payments when you close on a refinance?

If you answered ‘no’ to all three of those, you may have just realized that you can refinance without it costing you any money outside of what you are already dishing out with your monthly mortgage payment. Basically, you can use the skipped payment period to pay for the cost of the refinance. It’s like a free gift of thousands and thousands of dollars back in savings. And yes, I know it’s not actually free, but you get my point.

Let’s say you actually do have a rate that’s lower than the current market rate though. In that case, what other gifts can you give yourself with a refinance? How about:

  • Home improvements/additions/renovations
  • Reduction of years on your loan term
  • Consolidation of debt (especially unsecured debt)
  • Paying for education instead of accepting student loan burdens
  • Accessing equity for the purchase of another property

Doing a refinance doesn’t always mean that your existing loan has to be touched. Home equity lines of credit are making a comeback and are a great way to access your valuable equity. By the way, you probably have way more equity in your home than you think, considering how the real estate market has been performing over the past few years.

One last thought though. Doing a refinance at the end of the year is a great way to replenish reserves used during the holiday season, and you can use the two-month skipped payment period as an opportunity to pay yourself back for all the giving you plan to do. Give us a call if you’d like to get started on your refi this holiday season, and we’ll crunch the numbers for you!

This weekly Sponsored Column is written by 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