When discussing real estate in Montrose, CO, you’ll find it’s almost always more exciting to talk about buying a house than it is to think about the money. Still, refinancing is a topic worth discussing, especially since it can save a significant sum over the years. Those savings could even lead you to a bigger and better house later, if that’s what you want.
Should you refinance? Consider your answers to these five questions to see if it makes sense for you.
1. Can You Get a Lower Interest Rate?
Interest rates have been on the increase lately. For most people, however, a refi only makes sense if it lowers the rate by at least 0.75 percent over the current rate. Doing so will cut your costs enough (in the long run) to make the closing costs and hassle worthwhile.
2. Can You Get Rid of Your PMI?
If you have an FHA loan and are paying monthly insurance premiums, having your home appraised may boost your equity. If you can get a high enough valuation that you have 20 percent equity, you may be able to get a conventional loan and kiss that extra payment goodbye. This could save you thousands of dollars per year.
3. How’s Your Credit Score?
If you don’t have an excellent credit score, you likely won’t get a good interest rate — and that can make your refinance much less valuable to you. If your credit score has room for improvement, continue making perfect payments to boost your score and reassess in six months.
4. How Long Will You Stay in Your Home?
It does cost money to refinance your loan, and those costs may or may not be rolled into the principal. Either way, it takes most people about 15 months to break even on the closing costs. If you plan to move sooner than that, your choice to refinance could actually end up costing you.
5. Do You Have a Home Equity Line of Credit?
Since a HELOC is also based on the equity built up in your house, you might need that lender’s permission to refinance. It gets complicated once you have more than one claim on the house as collateral, so you’ll need to do some research about your existing terms if you’re in this situation.
If you’re considering refinancing your Western Slope home, make sure you get great advice from a qualified loan officer. Just as you would work with a real estate agent to buy a house, so too should you work with a professional to get a clear picture of your finances before making the leap.
Gaye Cox
SVP of Construction and Morgage Lending
2711 Commercial Way, Montrose, CO 81401
970-497-5328
NMLS: 502132
Copyright 2017-2021 Keller Williams Colorado West Realty, LLC. If you have a brokerage relationship with another agency, this is not intended as a solicitation. Equal opportunity housing provider. Each office is independently owned and operated. For sale by owner data not included in research findings. Sales data reflects sales from homes not limited to the Atha Team LLC. This information was gathered from Keller Williams, The National Association of Realtor, CoreLogic data analysis firm, Montrose Association of Realtors, and the Mortgage Brokers Association. This data is considered accurate, but is not guaranteed. Copyright Atha Team LLC 2017-2021. All Rights Reserved.