Q: I can shorten the term of my loan by 12 years and lower my interest rate by two percentage points. My monthly payment will rise by $300, and the closing costs will run about $3,000. Is it worth it to refinance?
A: It goes without saying that you'll save a bundle of interest cost by killing off those 12 years of mortgage payments, and you'll more than recover your $3,000 over time. However, before you commit to that sizable increase in monthly payment, you'll want to make sure that other facets of your financial life are well managed. This includes paying off high-rate credit cards, getting life insurance in place, funding retirement and education accounts and more. If that $300 per month can be put to better or more broad use, you may wish to consider a somewhat longer mortgage term, which would put less of a commitment on your cash flow.
- What is a rate and term refinance?
Homeowners have a variety of reasons for refinancing and each reason can indicate that one refinance option or another makes the most sense.
- Are ten-year fixed-rate mortgages (FRM) available anywhere?
Sure! Virtually all lenders who sell product to Fannie Mae or Freddie Mac will be able to offer you mortgage with a 10-year term. However, interest rates are usually the same as the lender's 15-year offerings.
- Can I get copies of checks from a past refinance?
It's not going to be easy, that's for sure.
- Can I refinance an underwater ‘kiddie condo’?
If the home is underwater, HARP is really your only option.
- Will shopping around for a refinance affect my credit?
Credit bureaus usually treat multiple applications to different lenders as a single entry in your credit file.