Unless you live under a large rock on Palmyra Atoll, you’ve probably heard the news: Refinancing can potentially save you thousands of dollars—especially if you refinance when rates are still low. So, what’s holding you back? Here are a few myths about refinancing and the facts to put your mind at ease.
Myth #1: It’s too late
MYTH: Its all over the media that interest rates have jumped and its not worth looking into.
FACT: With a recent rate hike by the Feds interest rates are still favorable and still very very low. What you want to look for is the break-even point. Let’s say there are $3,000 in closing costs and paying that amount will save $100 a month in your mortgage payment, the break-even point will be 30 months—or just under three years. If you plan on staying in the home for at a minimum 3 years then its probably a good move to refinance.
Myth #2: I won’t be able to qualify
MYTH: Maybe you felt the hit of the melt down back in 08′ and you are still recovering, maybe your credit hit rock bottom and you keep hearing there is no hope for you.
FACT: Even if you are still in recovery mode you might still qualify and it might save you a ton of money to look into a refinance. Lending guidelines are starting to loosen up and opportunities are there. Don’t let the past stop you from looking into the future.
Myth #3: You’ll have to start over with a 30 year loan
MYTH: If you refinance you will have to start over with a 30 year loan and you are into your current loan 10 years.
FACT: To give you the lowest monthly payment going with a 30 year loan is an option but its not the only choice. You can switch to a 10, 15, 20 or a 24 year loan. Might be worth looking into an ARM loan if you are not planning on being in the home long term. If you picked an ARM loan you should fully understand the initial, annual, and total rates associated with your mortgage product and its time frame, as well as a worst-case scenario of how high your payment could go if you don’t sell the house as planned. The options are endless and any of our talented loan officers would love to help give you a FREE consultation to discuss options.
Myth #4: Refinancing allows you to change only your rates and terms
MYTH: A home loan refinance isn’t just about decreasing your mortgage payments or changing up your terms.
FACT: As property values continue to increase it is become more and more popular to use some of the equity. Maybe you had some medical bills pile up, maybe a kid is getting ready to head off to college, maybe your home is a little older and its time for a remodel. You can use the equity in your home to take care of a few things. Make sure you consider all of the pros and cons before signing.
Myth #5: Refinances take too much time and effort
MYTH: So you hate all the paperwork.
FACT: Yep, there will be paperwork. We will still need to verify pay, employment and there will be an appraisal. But don’t just give up before you even start. Keep in mind you are not moving, you are already in the house. The stress level will be way less. You will also be saving a decent amount of money each month.
Here is another blog post about refinancing, 5 Signs You Should Refinance
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