There is an old real estate mortgage rule, you should only refinance if your new interest rate is at least two points lower? That may have been true years ago, but with refinancing dropping in cost over the last few years, its never the wrong time to think about a new loan. Refinancing has a number of benefits that often make it worth the up-front expenditure many times over.

For instance, if you are able to drop your rate from say 6.5% to 6%, that is only one half of a percent. Do you think it's worth it. Most people say no but let's do the math for just a moment. On a 150K loan amount the difference in your payment would be $49. Doesn't seem like that much but over 10 years that would save you $7,489. And if you put that extra cash in a growth fund for the same amount of time only getting 8% return on your money you would have saved an additional $9,100. Now you see why it might make sense to refinance now.

If you are consolidating debt, you will want to consider your monthly savings that you will realize from a refinance. In many cases, borrowers can save a significant amount of money each month by using their equity to consolidate their debts.

Rate and Term refinancing: If you cannot afford to reduce the term of your loan (say 30 yr to a 15yr) you still can reduce the number of years to pay off your mortgage by using the savings from a rate reduction and returning it directly to the principal each month.

cachebroker@gmail.com Contact us now for an analysis of all your debt and see how we can lower your total monthly payments!

Before you make the call or sign any papers, consider the following questions:
Do you plan to stay in your current home a while?
What is the total cost to refinance the loan?
What About Title Insurance on a Refinance?
How long will it take to recoup your out-of-pocket money and any expenses which are added to your principal balance?
If you are cashing out equity, what do you plan to do with the money?
Are you dealing with a reputable mortgage company?

A financially sound refinance should benefit the homeowner in one of three ways. Most refinance to lower costs in the long run, either as a result of lower monthly payments or by way of paying off the mortgage in less time. Some homeowners refinance to restructure their financing, for instance, to replace a balloon mortgage that becomes due, or to get out of a volatile adjustable rate mortgage. The third reason to refinance is to pull cash out from the equity of the home.

Often, people believe that since you pay off a 15 year mortgage twice as fast, the payments must be twice as much. In fact, a 15 year mortgage may only cost 15% more each month than a 30 year mortgage. This is because most of the money you are paying each month goes toward interest. You may be able to refinance into a lower rate, switch to a 15 year mortgage, and pay the same amount each month that you do now.