Is it Time to Refinance? | Mortgage Lender Atlanta

The stories are all over the news, including this one from the Associated Press, that mortgage rates are low.

How low? Well, depending on where you look, anywhere from 37 year lows to All-time lows. I can tell you that from a raw rate standpoint, they are at all-time lows.

So, should you refinance now? The philosopher in me would answer that with one definitive word: Distinguo. (i.e. It depends)

First question to ask yourself – Can you refinance? Many people’s homes are underwater. They owe more than the home is currently worth. If that is your circumstance, then another set of options are available to you outlined in the post that I linked to above. That is, unless you are in an FHA mortgage loan, in which case you can do a Streamlined FHA refinance. Call me and I will walk through how that is done. And, that is a great topic for another post.

Assuming you can refinance, the Second question is, should you? In the simplest form, three things determine whether you should refinance your Atlanta mortgage, or not:

What is your Loan-to-Value? We’ve determined that you do not owe more on the home than it is worth. Now, sometimes higher loan to values carry slightly higher interest rates. Again, for FHA loans, that is not the case. For conventional, if can be.
What is your credit score? Lower credit scores now carry with them either higher discount points to get the best rate, or higher interest rates with no points. This is true of conventional loans, read Fannie and Freddie products. It is substantially less so with FHA loans.
How long will you be in your home? If you are planning on selling in the early Spring, then a refinance won’t make any sense. If not, then the length of time you will likely be in the home matters. If this is it, the last home you will ever buy and you plan to die happily in it, then look at refinancing into the lowest rate possible, paying full closing costs (but I am still not a fan of paying points). If you will be there a while, but know you will be moving on down the road at some point, then I would recommend a slightly higher rate, but low or no closing costs. Why eat up your equity with fees, when you will still be saving a lot each month with a lower rate, and keep the equity in your home.

There are several ways to weigh this. And, other questions, like should you pull cash out and consolidate debt into the new mortgage. That is an option as well. And a good one to consider if that is your circumstance, because of the rising inflation that is just around the corner. Take advantage of the low rates to prepare to weather the storm.