Woburn MA homeowners may think about refinancing while interest rates remain low. Refinancing involves some up-front costs but can lead to smaller monthly payments. It can take place with the existing lender that retains a mortgage or a entirely different bank. Below details Woburn MA homeowner loan refinance advice including the costs and reasons for refinancing.
When to Refinance a Woburn MA Property
Consider the Real Estate Market
The real estate market can affect your refinancing options. If Woburn MA real estate prices dropped from when you bought the property, this may make refinancing more difficult. Banks traditionally lend up to a certain percentage of the property’s value, based on an appraisal. If your loan balance is higher than that percentage, you may have to reduce your balance in order to refinance. FHA mortgages have the benefit of a streamline refinance that does not require an appraisal. There are also alternatives for home buyers who had twenty percent equity at the time they intially purchased but are currently under water due to declining real estate values. A local mortgage professional can help you identify these different options.
Interest Rate Difference
The traditional rule is to refinance when the prevailing rate is at a minimum one percent lower than your current rate. The monthly savings over the life of the mortgage would make it worthwhile. Also, some banks will not authorize a refinance unless the savings exceeds a specific percentage.
Fees and Other Factors
There are expenses that come with refinancing a Woburn MA home loan. These include closing costs, bank fees, pre-paid interest, and mortgage insurance, just to name a few. Fees can vary depending on the mortgage company and type of mortgage. Understand these expenses prior to refinancing and analyze it against the overall savings. Also note that you will have a delay between when your current mortgage is paid off and the next payment is due, so that money can be paid towards your closing costs.
About Woburn MA Homeowner Loan Refinance Advice
In addition to the Woburn MA homeowner loan refinance advice detailed above, also factor in how many years you intend to live in a property since the savings is likely realized over many years. Mortgage rates are also influenced by your personal finances and credit scores, so consult with a Woburn MA mortgage professional for information on your personal situation. The advice above is general and may not cover everything applicable to your mortgage or personal situation.