Should you refinance your home?

The refinance boom during early 2000 was because of 911. The feds cut rates to improve the economics of that terrible time in American history. It seems like in 2008 the terrorist attacked our financial markets too. Naturally when the economy is bad the feds lower the feds funding rate to influence lower interest rates down the road. Lowering interest rates especially since we are in a recession will influence refinances and possible new home buyers. Current prime is 4%. This trickles over into other financial markets such as mortgage. In this article I wanted to discuss whether or not you should refinance your house.

Important refinance questions:

1. Are you going to be in your house for a minimum of 10 years? The reason I ask this is it will take about 10 years to recover the cost of a refinance.
2. Will you be lowering your interest rate a minimum of 1.5%. If you cannot lower your interest rate from your current rate at least 1.5%, you are wasting your money.
3. Do you have the value in your house to do a refinance? If you don’t have the value to roll in your refinance costs then you will have to pay the cost out of your own pocket. Have a lender make sure they can get value before you get knee deep in a refinance.
4. Refinance your house at the first of the year, the later during the year it is, the more escrow costs you will have to roll into your note.
5. What are the lender fees? Shop around and get some Good Faith Estimates to save on closing costs.

You can currently get interest rates on a 30 year fixed mortgage around 5.875%. This is a great interest rate. We project that interest rates could get in the upper 4ish range. This is another great opportunity to put your mortgage in a 15 yr and save on interest paid on your note.

Of course with the tightening up on credit requirements this might be a great time to check your credit report and see where your credit score stands. You definitely want to approach a lender educated about what is on your personal credit report. your resource for the latest credit news.

Comments are closed.

Disclaimer: This information has been compiled and provided by as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.