When to Refinance

 

Refinancing your home mortgage can offer many benefits.  Unfortunately there has been a lot said and written about mortgage refinancing that is inaccurate and misleading—such as the “rule of thumb” that your rate must come down by this much or that much before it makes sense to refinance.  Then there is the never ending stream of misleading information that we all get on a daily basis from spammers, telemarketers and direct mail—most of which is designed to generate business through providing incomplete pieces of information and false promises that have no basis in reality and little actual credibility.

 

Borrowers obtain the best results when they work with trusted mortgage professionals who are experience and knowledgeable.  They can help you to evaluate your situation and determine what possible benefits can be obtained from refinancing.  If you are talking to someone about refinancing who is unfamiliar with the “same payment” calculation, the “same term” calculation, or the “break even period” your best bet is to politely end the conversation and terminate all future contact.  Simply hang up the phone and call Pacific Inland Home Mortgage at 1-800-368-REFI or go to www.pacificinland.com to obtain credible information from trustworthy mortgage professionals.

 

In reality it really only makes sense to refinance your home mortgage if one or more of the following criteria is met:

 

1)     The “same payment” calculation shows that by refinancing, without pulling cash out, and continuing to make the same payment you are currently making, you will pay your “new” loan off sooner than the one you presently have.

2)     The “same term” calculation shows that you can obtain a lower monthly payment and still be able to pay your “new” loan off in the same amount of time or less than the amount of time that is remaining on your current loan.

3)     Your monthly savings will allow you to “break even” on the cost of refinancing in a reasonable time.

4)     You are obtaining a lower monthly payment and you don’t care if your term is extended, since the lower payment is more important to you at this time. You may truly need lower payments to achieve important goals, such as investments, travel or sabbaticals.

5)     You are pulling cash to consolidate non-deductible consumer debt such as credit cards, auto loans or installment loans that make good financial sense to pay off with a tax deductible home mortgage.

6)     You are consolidating a first and second to obtain a more manageable monthly payment.

7)     You are moving out of an adjustable loan that is about to start adjusting to less comfortable rates with higher payments than you will have if you refinance now.

8)     You are pulling cash out that you want or need for any reason, at the lowest rate possible, which makes good financial sense.

 

Using the above criteria as a guide along with reliable information and accurate calculations from a trusted mortgage professional, you can always make an informed decision about refinancing. 

 

It is important to know when NOT to refinance, so that you act in a sensible manner to protect the equity you have built up in your home and your credit rating, both of which will always be very important to you.  A trustworthy mortgage consultant will make sure that you only undertake refinancing when it serves your needs or your goals.  Unethical profiteers and inexperienced salespersons will say anything to sell you a new mortgage so that they can make money—regardless of whether it is good or bad for you.   It would seem to make sense NOT to refinance if any of the following criteria are true for you:

 

1)     You do not need a lower payment than you currently have and it does not make sense to start over at 30 years.

2)     You do not have a strong need for either a lower payment or cash out and the “break even” period is longer than you expect to own the property.

3)     You are being “baited” with the introductory rate on an adjustable that will not really offer any benefits in the long run.

4)     You have no need to consolidate debt or pull cash for any reason.

 

 

Again, your chances of success are much greater if you work with trusted mortgage professionals who have the experience, knowledge and motivation to help you to achieve your personal goals.  For more information, call Pacific Inland Home Mortgage at 1-800-368-REFI or go to www.pacificinland.com.