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Monthly Archives: August 2012

When should you refinance?


While talking with a friend of mine last week, he asked if he should refinance.  There are many commercials about refinancing, but who can you trust and what information do you provide?  This is not my friends area of expertise, as he is unfamiliar with the analysis process.  So, he appreciated the help, as he did not want to be inundated with sales calls, extra questions, etc.  By analyzing his loan information in 5 minutes, it was determined that his payment would decrease by more than $250 in a 30 yr loan, and the costs would be recouped within as little as 11.2.  Wow, that is a great savings!  What would you do with an extra $250 per month?

Are you considering refinancing?  If you are, call or email your loan information to me.  I will help you determine if it is the right time to refinance.  Or, use the website below.

  1. Gather the following basic information:
    1. Original and current loan amount.
    2. Loan interest rate.
    3. Original and remaining term of your mortgage.
    4. Current income tax rate.
    5. Current estimated home value.  I suggest using Zillow at http://www.zillow.com/
    6. The proposed rate.
    7. The proposed loan term.
    8. Estimated closing costs.

Input information into the following website:

Bankrate.com mortgage calculator

The final determining question is how long do you expect to stay in the home?  If you are staying in your home longer than it takes to recuperate the refinance fees, then it is in your best interest to refinance.

The breakeven analysis calculator will provide the answers.

In general, refinancing when current rates are lower than your rate by .50% or more is when the benefit begins.

 
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Posted by on August 22, 2012 in mortgage, mortgage refinance, refinance

 

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11 suggestions for saving $$ on your mortgage


Usually the mortgage payment is the largest monthly expense, especially in California. After we receive the loan and begin making payments, we forget there are opportunities to cut costs. With a little effort we can all reduce our expenses.  This is the first in a series on how to reduce your mortgage costs.

Mortgage tips to consider:

  1. Refinancing when current rates are lower than your rate by .50% or more.
  2. Refinance from a 30 year loan into a 15 year fixed, thereby saving money on the total amount paid on your mortgage.
  3. Increase your credit score prior to refinancing or applying for a home loan, thereby qualifying for the best or lowest rate and fees possible.
  4. Compare mortgage lenders rates and fees when applying for a home loan.  See my tips on a future blog.
  5. Pay additional money towards principal balance, thereby decreasing the total loan balance and subsequent date when balance is paid-in-full.
  6. Pay 1/2 payment 15 days before it is due and the remainder on the due date, which decreases the overall balance paid over time.
  7. Drop monthly mortgage insurance coverage(MI or PMI), if it was originally required on your loan.
  8. Fight property assessment valuation by the state. (This saves money on taxes)
  9. Shop for lower priced home owners insurance.
  10. Recast your mortgage payment.
  11. Loan modification.

Fees and guidelines vary by lender, program, loan amount, loan-to-value(LTV), credit score, state, fixed rate loan versus adjustable, etc.

 

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