Does your mortgage have a prepayment penalty?
Check your monthly mortgage statement to see if your mortgage has a prepayment penalty. If there is a prepayment penalty, you’ll have to pay the penalty to refinance your mortgage. You may be able to avoid the prepayment penalty if you refinance with the lender you have now.
Are you planning to move in the next few years?
If you know you’re going to move in the next few years, you might not have time to recoup the costs of refinancing.
Can you afford the closing costs?
Refinancing typically requires closing costs which could be in the thousands. Lenders may offer no-cost refinancing but they are usually at the expense of a higher interest rate. Make sure you compare the advantages and disadvantages.
How much lower will the new interest rate be?
Refinancing may not be worth it if your interest rate and monthly payment savings are minimal.
What is your credit score?
If your credit score isn’t up to snuff, you may not be able to refinancing into a better rate. Check your credit score and make any improvements you can.
Are you refinancing to an adjustable rate mortgage?
If you are refinancing to an adjustable rate mortgage consider what the impacts of a future rate hike may do to your monthly payment. If interest rates are low now the adjustable rate may seem attractive. However, if rates rise in the future you may see your monthly payment increase.
DRE ID # 01769353
NMLS ID # 394275
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