Is “Now” a Good Time to Refinance My Home?

Knowing when to refinance your home isn’t an exact science. Instead, there are a number of factors you’ll want to consider before making a decision, including:

• How long do you plan to stay in your home?
• How much lower is the new interest rate?
• Will you be able to switch from a variable to a fixed-interest rate?
• Will you be able to shorten the repayment terms of the loan?
• What will the closing costs be?
• How much equity do you have in your home?
• Are you planning to take cash out when you refinance?

Your answers to these questions can help you decide if refinancing your home makes sense. In many cases, a number of these variables work together to tip the scale in one direction or the other.
For example, if you plan to stay in your home for a long time and are worried about what will happen to your variable rate mortgage in the years ahead, refinancing to a lower, fixed-interest rate can provide significant peace of mind for you and your family.

Ultimately, you’ll need to decide if the long-term benefits of refinancing outweigh your short-term costs. At a minimum, you’ll want to consider how long it will take you to recoup the closing costs associated with refinancing with the amount you will save each month due to lower mortgage payments.
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What is the Difference between the Interest Rate and the Annual Percentage Rate (APR)?

The interest rate charged on a home loan is a straightforward percentage rate used to calculate how much you will pay for the benefit of borrowing money to buy a home.
On the other hand, the annual percentage rate (APR) adjusts the interest rate to include the other fees associated with a loan. Charges reflected in the APR include estimated closing costs, miscellaneous fees and mortgage insurance (if required).

The Truth in Lending Act requires all lenders to disclose the APR on the mortgage loans they advertise. As a prospective borrower, be sure to request this information before selecting a loan provider.
However, be aware that APRs aren’t always 100% accurate because they are based on estimated closing costs and lenders are permitted to round off by up to a quarter of a percent.
To Find Out Today’s APRs, Contact a Qualified Loan Professional for a No-Obligation Quote.

Should I Consider a Cash-Out Refinancing to Pay for Home Renovations?

Taking cash out of your home when refinancing can be tempting, particularly if you plan to use the funds to improve the property. However, as with any other financial decision, you’ll want to consider the pros and cons as they relate to your own unique situation.

Factors such as the current and expected future appraised value of your home, the amount of your new monthly payment, and the length of your new loan should be taken into account. In addition, you should also consider how much equity you currently have in the home and how long you plan to stay in it before making a decision.
Finally, the true value of a home renovation can’t always be measured in dollars and cents. The added value or pleasure you derive from the newly remodeled space should also be considered. This can help offset the fact that you may not recoup every dollar you put into remodeling your home when you sell.
Should You Take Cash Out of Your Home for Improvements?

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Should I Take Cash Out of My Home to Pay Off My Car Loan?

It may seem like a slam-dunk to pay off a large car loan with money taken from your home – and in some cases, it is. This is particularly true when:

• You can deduct your mortgage interest from your taxes
• Your after-tax interest rate on your mortgage is less than what you are paying on your car loan
• The car loan doesn’t have a pre-payment penalty
• Doing so won’t cause you to pay for private mortgage insurance (PMI) on your new loan

On the other hand, you need to consider if you want to spread out payments on that car loan over the next 15 or 30 years. This will negate the short-term savings associated with lower interest rates and will lock you into paying for that vehicle well beyond its functional life.

The best way to evaluate this decision is to consider the refinance on its own merits. In other words, does it make sense to refinance your home based on lower interest rates or shorter repayment terms? If this is the case and the above criteria are met, it may be a good financial move.

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