Daily Dupaco

Wednesday, May 18, 2016

Is it time to refinance your mortgage?

If you took advantage of refinancing your mortgage a few years ago, you might be in a position to save even more green by traveling the refinance road again.

“A lot of homeowners who refinanced in 2011 are already coming back, because the interest rates are a full percentage lower,” says Krystal Frederick, mortgage lending consultant supervisor at Dupaco.

 

When does a refinance make sense?

Several factors should be weighed on a case-by-case basis when determining whether refinancing your mortgage is worthwhile.

The old rule of thumb recommends refinancing when you can drop your interest rate a full percentage point or shave $100 from your monthly payments, according to Frederick, who leans toward the latter guideline.

When you refinance, you do incur closing costs. So if you’re planning to sell your home in the near future, you might not recoup those fees before you move.

“There are so many variables and scenarios that go into determining when a refinance is a good fit,” Frederick says.

What are the benefits of refinancing your home?

When you are eligible to refinance, it can be a smart move that leaves you money ahead. A refinance can:

  • Reduce your monthly payment. Refinancing to a lower interest rate can cut your monthly mortgage payments, sometimes saving you hundreds of dollars each year. 
  • Reduce your loan term. You might be able to move from a 30-year term to a 15-year mortgage or even a Dupaco Mini Mortgage, which is paid off in 10 years or less. “If you can refinance into a shorter term and keep your payment the same, it would be worth it,” Frederick says.
  • Reduce your PMI. If the value of your house has increased, you might be able to reduce your private mortgage insurance (PMI) premium. PMI premiums are determined by your credit score and your loan-to-ratio value, which compares the value of your loan to the value of your home. The higher your down payment is when you purchase a house, the lower your PMI premium will be.
  • Move your mortgage into a fixed-rate. A refinance might allow you to replace an adjustable-rate mortgage (ARM) or land contract with the predictability of a fixed-rate mortgage. 
  • Allow you to have your loan serviced locally. When you have questions about your mortgage loan, you can call your member-owned credit union. 

If you’re not sure whether it’s worth refinancing, check out Dupaco’s refinance calculator or contact a Dupaco mortgage lender at 800-373-7600, ext. 204.

By Emily Kittle

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