Are you thinking about refinancing? Refinancing involves some fees but can result in smaller monthly payments. It can be with the current lender that holds your loan or a new bank altogether. Franklin TN Homeowner Mortgage Refinancing Guidance including the costs and reasons for refinancing are discussed in this blog.

Timing the Refinance of a Home

Real Estate Market Conditions

The real estate market can determine your refinancing options. If property values dropped from when you bought the property, this can make refinancing a bit complicated. Mortgage companies typically issue loans up to a certain percentage of home values, and values are determined by a current appraisal. If your mortgage balance is higher than that percentage, you might have to reduce your loan amount in order to refinance. FHA loans (and possibly others) have the option of a streamline refinance that does not require an appraisal. There are also alternatives for home buyers whose home values are below their loan balance because of declining market values. A local mortgage professional can help you identify different options.

Interest Rate Difference

The traditional guideline is to refinance when the prevailing rate is a minimum one percent lower than the existing rate on your loan. The lower payment each month would make the up-front expenses of refinancing worthwhile. Also, certain mortgage companies may not authorize a refinance until the savings exceeds a specific amount.

Expenses and Other Considerations

There are expenses associated with refinancing a loan. These include closing fees, lender fees, pre-paid interest, and title insurance, just to name a few. The cost can differ depending on the mortgage company and type of loan. Understand these expenses before refinancing and analyze it against the monthly savings. Also note that you will have a delay between when your current mortgage is paid off and the new one is due, so that money may go towards those expenses.

Franklin TN Homeowner Mortgage Refinancing Guidance

In addition to the Franklin TN homeowner mortgage refinancing guidance provided above, think about how long you plan to own a residence because the savings is typically realized when added up over several years. Interest rates are also impacted by your credit scores, so get advice from a local mortgage officer for assistance. The guidance here is generic and does not detail things specific to your mortgage or your situation.

 

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