Should You Refinance the Mortgage
on Your Bonita Springs Real Estate?
That’s a very common question and the basic answer is: If you can save money, then yes you should.
To arrive at the conclusion that you will actually save money, you’ll have to look at several things:
#1 How much will it cost to get the loan? EVERY loan costs something. If all other factors were equal, the loan with the lowest fees would be best. (The 'No-Cost mortgages you hear about are a crock. No, you aren't paying anything up front, but to compensate for that you will be paying a higher rate so there certainly IS a cost for the loan!)
#2 How much lower will the payments be on the new loan? If you currently have a 30 year, fixed-rate loan for $300,000 @ 7.00% your monthly principle and interest would be $1996. If you could get a new rate of 6.00% your monthly payment would drop to $1799, while 5.00% would be $1610.
So now you take the cost of the new loan and divide it by the amount of money you'll be saving each month. That shows you how long it will take before you REALLY start to save money with the new mortgage.
If the loan cost $3500 but your payment dropped by $250 per month, it would be 14months before the cost of the loan was equaled out by the savings. A relatively short time. In this case the refi would make sense.
But if you were only saving $50 each month it would take 70 months nearly 6 years before the refi would be worth it. Will you even be in the home that much longer? If not there would be no reason to refinance the loan.
Another reason would be to turn an adjustable rate mortgage (ARM) into a fixed one.
The interest rate on most ARM's can actually increase up to 6% over the initial rate! Imagine starting at 5%, that would be great, but how would you feel if it went up to 11%? If you want to avoid that possibility, refinancing to a fixed-rate loan (even at a slightly higher rate) would ensure that you no longer have that risk. (BTW, with ARM's you should always prepare for the worst - that way you'll never be caught off-guard.)
Once we figure out what you qualify for we can quickly determine whether or not refinancing would be the best thing for you to do.
Feel free to contact me with any questions you may have.
--Marc J Blasi
For some time now, Knightlines Mortgage Services has been offering the people of Florida a convenient way to finance and re-finance their residential property.
But that isn’t the entire story - we are also doing commercial lending in all 50 states. AND - now we can offer commercial financing OUTSIDE of the country as well. Caribbean, South America, etc - just call for the details.