Are you considering refinancing? 3 important questions to remember.

Everyone today asks me if I am busy with refinances. The truth of the matter is pretty much, no (lol). The media is creating a frenzy much in the same way that they helped with the frenzy of homebuying 3-4-5 years ago.

If you are considering refinancing, there are 3 very important aspects to the process which must be taken into consideration:

1) Will the house appraise properly in order to make the transaction work?

Of course, this question can only be answered by paying an appraiser to come out and do an appraisal. Does the appraisal cost money and can you, in the end, pay for something that does not end up working out? Of course; however, relative to what you are looking to save, it is a very small cost to pay in order to get a solid answer.

2) How much money are you saving monthly?

Ask yourself this question -- does the amount of money that you are saving help your overall lifestyle and make sense for you to do? Every single dollar counts, but be sure to measure your savings vs. your fees. This will help you calculate your break even point. Don't forget that if you have had your mortgage for 3 years, you are going back another 3 years again. I had a customer recently tell me that the loan officer who she was speaking with told her that she was saving $18,000 over the next 30 years.

Ok, now $18,000 is a ton of a money, but let's do some quick math. $18,000 over 30 years? That is $600 per year, $50 per month. To save $50 per month while adding another 4 years to your mortgage (she had already paid on her home for 4 years) does not seem to add up. Also, how many people today keep their mortgages for 30 years? As you can briefly see, the numbers do not always add up when you start scratching below the surface.

3) How much longer are you planning on staying in your home?

Now I understand that no one can guarantee that they are even here tomorrow; however, you do want to ask yourself this question since it will, when coupled with your break even point, help you to determine if the refinance makes sense.

If you are looking at refinancing so that you can run around your neighborhood and brag about your 4% interest rate, you are refinancing for the wrong reason. If you are interested in thinking through a very important financial decision, taking your time and understanding what you are doing, then you should definitely consider refinancing.

I can be contacted anytime at 1-440-838-5291 to help answer those questions for you.