When to Refinance Your Mortgage

As I have said many times, refinancing is all about timing. Here are some tips about when to refinance.

If you don’t plan on staying in your home long enough to recoup the closing costs of a refinancing, it may not be worth the effort.

Dont jump at the first advertised low rate dangled in front of you. Shop around for a broker who can offer a variety of loan choices.

Borrowers should also resist becoming fixated on obtaining the lowest possible rate. Sometimes people get caught up in that eighth of a percent. One recent client calculated savings of $90,000 over the life of his refinanced loan. When rates ticked up an eighth of a point, the client held off — even though he still would have saved some $88,000 over all. You never know when you are going to hit the low; you really have to ask yourself if the number work for you.

Here are four questions that borrowers should consider carefully before proceeding with a refinancing:

HOW SECURE IS YOUR JOB?

WHAT ARE THE SAVINGS? Get a good-faith estimate from your lender and make sure it includes all the costs involved. Then compare these numbers with the amount you would save in the first year of the new mortgage.

WHAT ABOUT THE RATE? Are you getting it locked in — and for how long? How many points are you paying to get a lower rate? It should be on the Good Faith Estimate.

WHAT’S THE RIGHT TIME FRAME? Will you be moving before the costs are paid for?

Again, it's best to discuss these issues. Always.