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ENLARGE
Many home owners have adjustable rate mortgages that are at the point in time where the rates are starting to increase. Other home owners have second mortgage that too are seeing rates increasing. So is it a good time for them, and you, to refinance the mortgage on your primary home, second home and investment property?
The answer to that question is maybe! Yes, being a mortgage broker I will see more business if the rates drop and many homeowners will refinance but not all homeowners need to refinance. Read on to see if refinancing your current mortgage is cost effective.
First of all, if you are planning to sell your home in the next year or so refinancing may not be cost effective. If the refinancing of the mortgage saves you $80 a month and the cost to refinance the mortgage was $2,000 you need 25 months to recoup your costs. So if you sell that property in 14 months your cost to refinance the mortgage is not cost effective. And, as always, there may be reasons why a property owner may need to refinance because that $80 a month may mean putting food on the table.
If you plan to own the property for years and years plus you can reduce you interest rate by a full percentage point or lock in a long term fixed rate, by all means get the ball rolling on refinancing your mortgage.
Another reason to refinance is to consolidate other bills you have on the books. High interest rate credit cards, car payments and student loans are prime items to add into the mortgage. One reason to add them into the mortgage is the interest rate. Home mortgage interest rates are not only lower than most all other interest rates. If your credit card is a double-digit rate you need to pay it off or roll it into the mortgage.
The other reason to roll other debt into the home mortgage is the interest paid on the mortgage is tax deductible; interest paid on credit cards, car payments and most all other debt is not deductible.
Now you may be asking yourself if it is wise to extend a car payment out over 15 to 30 years. Generally I would say that paying for a car for years is not a good idea but let us look at the big picture. Assume that you have a home valued at $575,000. Your mortgage is $200,000 and at a rate of 6 percent. Plus your credit cards and car loans add up to $30,000. By refinancing the mortgage to a rate of 4.5 percent and adding in the other debt your new mortgage balance is $230,000. The monthly payment for the old mortgage was approximately $1,323 and the new payment, including the car and credit card balances, would be approximately $1,161. Your other payments have been eliminated and your mortgage payment decreased by $162.
The bottom line is to look into refinancing. If it works out that refinancing places you in a better financial situation then great. If the refinance does not make sense then you can sleep at night at least knowing that you investigated it and are in good shape too.
Call Bob Kieber for answers to your mortgage related questions at (970) 262-1199 or email him at rkieber@comcast.net. Bob is a local mortgage lender and principal of Resort Lending. He has 30-plus years of professional experience in real estate, finance and investments, and is a longtime resident of the High Country.
The answer to that question is maybe! Yes, being a mortgage broker I will see more business if the rates drop and many homeowners will refinance but not all homeowners need to refinance. Read on to see if refinancing your current mortgage is cost effective.
First of all, if you are planning to sell your home in the next year or so refinancing may not be cost effective. If the refinancing of the mortgage saves you $80 a month and the cost to refinance the mortgage was $2,000 you need 25 months to recoup your costs. So if you sell that property in 14 months your cost to refinance the mortgage is not cost effective. And, as always, there may be reasons why a property owner may need to refinance because that $80 a month may mean putting food on the table.
If you plan to own the property for years and years plus you can reduce you interest rate by a full percentage point or lock in a long term fixed rate, by all means get the ball rolling on refinancing your mortgage.
Another reason to refinance is to consolidate other bills you have on the books. High interest rate credit cards, car payments and student loans are prime items to add into the mortgage. One reason to add them into the mortgage is the interest rate. Home mortgage interest rates are not only lower than most all other interest rates. If your credit card is a double-digit rate you need to pay it off or roll it into the mortgage.
The other reason to roll other debt into the home mortgage is the interest paid on the mortgage is tax deductible; interest paid on credit cards, car payments and most all other debt is not deductible.
Now you may be asking yourself if it is wise to extend a car payment out over 15 to 30 years. Generally I would say that paying for a car for years is not a good idea but let us look at the big picture. Assume that you have a home valued at $575,000. Your mortgage is $200,000 and at a rate of 6 percent. Plus your credit cards and car loans add up to $30,000. By refinancing the mortgage to a rate of 4.5 percent and adding in the other debt your new mortgage balance is $230,000. The monthly payment for the old mortgage was approximately $1,323 and the new payment, including the car and credit card balances, would be approximately $1,161. Your other payments have been eliminated and your mortgage payment decreased by $162.
The bottom line is to look into refinancing. If it works out that refinancing places you in a better financial situation then great. If the refinance does not make sense then you can sleep at night at least knowing that you investigated it and are in good shape too.
Call Bob Kieber for answers to your mortgage related questions at (970) 262-1199 or email him at rkieber@comcast.net. Bob is a local mortgage lender and principal of Resort Lending. He has 30-plus years of professional experience in real estate, finance and investments, and is a longtime resident of the High Country.
