Our Mortgage Advisors are still often asked, “Should I refinance?” The right answer is not always obvious. Fortunately, our Mortgage Advisors value long-term relationships, and work with clients in figuring out it if refinancing makes sense over the short and long term.
“Do you want a fixed rate?” Interest rates on mortgage have increased slightly in 2017. And, over time, interest rates are expected to increase further although there is an argument they won’t. Opes’ mortgage rates, however, are still very low. If you have a variable interest rate, now might be the time to lock in a lower rate. But the bottom line advice doesn’t change: keep the term as short as possible to save the most money.
“How long have you been in the property, and how long will you live there?” If you have only had your mortgage for a few years, your mortgage balance has not reduced by much. And if you continue to refinance every five years, your balance will barely budge although in the Bay Area’s appreciating markets the loan-to-value will drop. If you refinance, make sure you plan to stay in your home long enough to get the benefit of amortization. Frequent moves and refinancing activity can make owning a home a worse economic decision than renting.
“Can you qualify?” Mortgage underwriting standards remain tight. “Do you have enough cash to cover the closing costs?” Closing costs are not small, but often can be financed through the loan depending on the loan to value. If you are trying to reduce your monthly payment, that might be just fine. If your goal is to save money, you should avoid financing the closing costs – talk to your Opes Advisor about this.
Our Mortgage Advisors tell clients to remember: lowering your monthly payment and saving money are not the same thing. By lowering your monthly payment, you are likely increasing the total cost of owning the home. Just make sure you do the math and fully understand how much more the home will cost you. If you are having difficulties paying your current mortgage payment, refinancing could be a good way to adjust to your new economic reality.
While Opes Advisors, a division of Flagstar Bank, Member FDIC, uses all reasonable efforts to ensure that this information is current, accurate and complete on the date of publication, no representations or warranties are made (express or implied) as to the reliability, accuracy or completeness of such information. Opes Advisors, a division of Flagstar Bank, Member FDIC, therefore, cannot be held liable for any loss arising or indirectly from the use of, or any action taken in reliance on, any information appearing in this email.