Home Refinancing Q & A

Are you trying to figure out if home refinancing is right for you? Here are some of the most common questions people have when it comes to refinancing a home mortgage.

Q. I have one of those adjustable rate mortgages. Should I refinance to a fixed rate mortgage now?

A. The answer is yes in nearly all cases unless you plan on moving in the next 1-3 years. If you currently have an ARM and you know it's going to go up (which in today's market it most likely is) then you should definitely be looking for a fixed rate mortgage.

Q. How do I know if I should refinance my loan?

A. This is different for everyone, but generally, you should ask yourself:

-How long do I plan to live in my home?

-How much lower of a rate can I get?

-Will the lower payments make up the costs involved in doing a refinance?

By knowing the answers, you can then better determine whether you should refinance your home loan or not.

Q. Is paying points for a lower APR a smart strategy?

A. In most cases the answer is no in refinancing. While it is true you can deduct the points paid on your income taxes, it is only throughout the life of the loan. So it can easily be years down the road before the monetary gains of a lower APR offset the cost of the points.

Q. How long will it take for a home refinance loan to close?

A. Depending upon whether your home will need a new appraisal, you will be looking at 3-4 weeks in most cases. If appraisers are backed up with work, then it could be longer. Unfortunately, you can be at their mercy when there is a glut of refinancing going on.

Q. What about those "no closing costs" loans?

A. As with most everything in life, there is no free lunch so to speak. Keep in mind that the no closing costs loans may actually come with a higher interest rate or even have extra fees put into the total amount of the loan. You really need to watch the fine print and do your due diligence here.