Many homeowners are looking to refinance from adjustable to fixed rate mortgages because of recent low interest offers. However, the question arises as to whether one should take out a fixed rate mortgage refinance or choose a different option.
Pittsfield, MA -- (SBWIRE) -- 07/29/2013 -- Real-estate-yogi.com may be able to assist folks by sharing its knowledge of the subject, such as:
- What’s the Goal?
- When to Refinance
- When NOT to Refinance
- Investigating Fixed Rate Mortgages
And the Goal of Refinancing Is…?
One needs to consider why he wants to refinance. The top reasons a person would like to get into a 10year fixed rate mortgage refinance is to lower his interest rate and to reduce the amount of time he has to pay on the loan. Another reason is to consolidate his debt into the one loan, leaving him only one monthly payment. Be sure to be clear about why one wants to refinance, as this may not be the right move.
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The Right Time to Refinance
Generally, the only time refinancing fixed rate mortgages makes sense is when one plans to live in the home for many years. One must consider the savings of such an action versus the costs of it. Be sure to tabulate the number of months at the lower rate to make up the closing costs of the new mortgage prior to going through with the refinance. This can be done using an online refinancing calculator.
The Time’s NOT Right If…
It is not the right time to refinance a 10 year fixed rate mortgage if one only plans to live in the home for a few years. In this case, the number of months necessary to equal the closing costs really comes into play. If it’s going to take 24 months to pay off the closing fees and an individual is only going to live in the house for another year or two, it just doesn’t make sense to refinance.
What’s the Draw of Fixed Rate Mortgages?
When a first time home buyer goes out to find financing for his new home, he often leans toward the lower interest of an adjustable rate mortgage. When he’s been in the house for several years, he may choose to do a fixed rate mortgage refinance to get the more predictable monthly payment amount. This is the “draw” of FRMs –they’re easier to budget for because the payment never changes.
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