Should I Refinance?

Refinance Adjustable Rate Mortgage

Question: Should I refinance my adjustable rate mortgage?

Answer: For most people the answer is YES based on the current market conditions, but that doesn't apply to everyone. You can quickly determine the best plan of action to reach your financial goals by clicking here. In the meantime, here are some helpful tips that should steer you in the right direction.

You should seriously consider refinancing your adjustable rate mortgage now if:

¨ Anyone with a line of credit that varies with prime rate.

¨ You have less than 2 years before your adjustable rate changes. If you plan on owning your home long term, extend the 2 year recommendation to 5 years.

 ¨ Your current adjustable rate is higher than 5.00%

If any one of these factors apply to you, start the process of refinancing your adjustable rate mortgage now.

Consider other factors before refinancing if:

¨ You have more than 2 years left before the first interest rate adjustment AND your current rate is less than 5.00%

¨ You plan on selling that home within 1 year of the first rate adjustment.

For a free consultation with all factors considered, just click here to get started.

You may want to hold of on refinancing if:

¨ You have more than 3 years left before the first rate interest rate adjustment AND your current mortgage rate is less than 5.00%

¨ You are positive that you will be selling your home within 1 year after the first rate adjustment.  

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More facts and advice about adjustable rate mortgages

Refinance interest only mortgage

Question: Should I refinance my interest only mortgage?

Answer: For most the answer is Yes. There are two reasons for this. The first is that most interest only mortgages usually have a higher rate than the standard mortgage product. Second, most people that have the interest only feature also have an adjustable rate mortgage. If you have a low fixed rate interest only loan, you probably don’t have to refinance, but make sure you pay extra!

You should refinance now if:

¨ You have an adjustable rate mortgage that is currently adjusting or will adjust within the next 2 years.

¨ You have a 1 month arm (also known as: option arm, pay option arm, pick a payment)

¨ You have a fixed rate over 6.75

¨ You want to pay off your home in your lifetime

If any one of these factors apply to you, start the process of refinancing your adjustable rate mortgage now.

You may want to hold off on refinancing if:

¨ You have a fixed rate at or below 6.750

¨ You have a pay option arm and can barely afford the minimum payment.

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More advice, facts, and myths about interest only

Cash out refinance

Question: Should I refinance and take cash out of my homes equity?

Answer: If you can get a good interest rate at or below what you currently have then this could be a good idea. If your going from an adjustable rate to a fixed then its ok if the interest rate is higher. Do not substantially increase your mortgage rate just to take cash out of your home. Note that the mortgage rates offered will be based on home much you are borrowing against your home’s value. Don’t get yourself into a mortgage that doesn't make sense just for the cash. There are many factors to consider with this type of refinance.