PA Homeowner Mortgage Refinancing Information

Are you thinking of refinancing? Refinancing involves certain costs but may lead to reduced monthly payments. It can take place with the existing lender that owns your loan or an entirely new lender. PA Homeowner Mortgage Refinancing Information including the costs and reasons for refinancing are discussed in this article.

Is It the Optimal Time to Refinance a Loan

Home Values

The real estate market can impact your refinancing options. If real estate values dropped from when you originally closed on your mortgage, this might make refinancing more difficult. Mortgage companies ordinarily lend up to a certain percentage of home values, based on an appraisal. If your mortgage balance is higher than that percentage, you may need to bring down your balance in order to refinance. FHA loans (and some others) have the benefit of a streamline process that excludes an appraisal. There are also programs for borrowers whose home values are below their loan balance due to declining market prices. An experienced mortgage consultant will assist you with identifying different alternatives.

Mortgage Rate Difference

The normal rule is to refinance when the interest is a minimum 1% lower than the existing interest rate on your loan. The monthly savings over the life of the loan would make it worthwhile. Additionally, certain banks will not allow a refinance unless the difference in monthly payment is greater than a minimum amount.

Expenses and Other Considerations

There are fees associated with refinancing a home loan. Examples are closing fees, bank charges, up-front interest, and mortgage insurance, just to name a few. The amount can differ depending on the mortgage company and mortgage program. Request an estimate before refinancing and compare it to the overall savings. Also know that you will have a gap between when your current mortgage is paid off and the new payment is due, so that money might be paid towards your closing costs.

PA Homeowner Mortgage Refinancing Information

In addition to the PA homeowner mortgage refinancing information provided above, also factor in how many years you intend to own a property because the savings is usually realized over several years. Mortgage options are also affected by your personal finances, so contact a local mortgage professional for calculations on your personal situation. The information here is general and does not detail everything applicable to your home or your finances.