Norwell, MA (PressExposure) December 28, 2009 -- As a new year dawns and uncertain economic times continue, homeowners might want to start the new year off by investigating what could be the gift of a lifetime for themselves and their families by considering refinancing their mortgage.
With mortgage interest rates at historic lows, Brian Comer, President of Norwell and Plymouth based Advance Mortgage Services outlines some basic reasons to consider refinancing now: â¢ Getting a lower mortgage rate and reducing interest costs and monthly payments. â¢ Converting an adjustable rate mortgage to a secure, fixed-rate mortgage. â¢ Consolidating first and second mortgages into a mortgage with a lower rate.
The answer to the question, "Should I refinance?" is a complex one, since every situation is different and no two homeowners are in the exact same situation. The conventional wisdom of refinancing only when you can save 2 percent on your rate is problematic. If you are refinancing to lower your monthly payments, the following calculation is more appropriate compared to the 2 percent rule: 1. Calculate the total cost of the refinance--example: $2,000 2. Calculate the monthly savings--example: $100/month 3. Divide the result in 1 by the result in 2--in this case 2000/100 = 20 months. This shows the break-even time period. If you plan to live in the home for longer than this period of time, it likely makes sense to refinance.
If you regard refinancing costs as an investment you'll be getting a more than solid return. If you save $100 a month in payments, you would save an additional $4,000 in payments (above and beyond the refinancing costs) even if you stayed in your home for only five years after refinancing.
Notes Comer, "Whatever you're considering, consulting with a seasoned mortgage professional can often save you time and money. Make a few phone calls, check out a few web sites, use an online mortgage calculator, crunch a few numbers, and spend some time to understand your options."