Is now the time to Refinace your mortgage?

Industry experts warn against rushing into a refinancing, especially if you’re a first-timer.


“The first question I ask people is, ‘What are your long-term plans — what are your plans for this house?


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, he said, adding that it takes about a year, on average, for that to happen these days. (A homeowner can expect to pay an average of 3 to 6 percent of the outstanding principal in refinancing costs.)


HOW SECURE IS YOUR JOB? If you feel you could be out of work in six months or a year, then don’t use up savings to cover fees or increase the down payment. “You don’t want to rob yourself of liquidity because you’re throwings to cover fees or increase the down payment.

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. (Look at the difference between your old monthly payment and your expected new one and multiply by 12.)

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? Ask to see a rate sheet.

WHAT’S THE RIGHT TIME FRAME? If your children are heading for college in nine years or your retirement is likely in 15, your mortgage term should match up. Most mortgages are made in five-year increments, but some lenders will offer more variety.


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Excerpts courtesy of the NY Times.