Should I refinance my loan? rates are at all time low?

This is a question I get asked a lot even from other realtors.

Yes rates are low but understand when you refinance you reset the clock if you have 10 years in on a 30 year and refinance you could be looking at a 40 year mortgage.

Also there are fees involved a lot of lenders say they don’t charge fees but they really roll them into the loan they do need to get paid also there are other fees, appraisal (yes sometimes waived), escrow and title fees, and other miscellaneous fees. This will get added in and it may not pay to refinance even with a lower payment because you have increased your balance.

For instance: I refinanced a mortgage with my lender in 2013, they told me there were no fees but when all was said and done a $411,000 mortgage came back at $415,000 balance. Yes I had a lower payment but my balance went up and the mortgage life was extended.

But if you have a high balance, high payment and you are around the 5-8 year mark it might make sense but I would encourage you to first check with your lender to refinance directly this may help with fees. Try to negotiate the fees.

Another idea is to recast your loan this is where with a lump sum, maybe tax return? You submit a lump sum that is applied to the principal and your loan is recast. The timeline stays the same, the interest rates stays the same but the payment goes down. Call me to explain more in detail on this one…

Bottom line rates are lower but really pencil out all the details, costs and length of loan before jumping in to refinance, a lower rate and payment may have a hidden cost