As you evaluate whether to refinance your home loan in Rochester, Michigan, Gem Home Loans can help you understand the possible benefits and drawbacks and help you decide if refinancing will help you reach your financial goals.
Gem Home Loans is a client-focused lender that prefers working one-on-one with clients in building custom financial solutions. We have a dedicated team of experienced professionals who understand Michigan and the local housing market.
Our goal is to fully understand your family’s needs and find you the best available home loan for your new home, second home, or investment property. We are dedicated to providing you with the highest level of personalized attention and customer service throughout the home financing process.
Refinancing means that you would like to replace your existing mortgage with one that, ideally, offers more favorable terms. During the process, your old mortgage will be completely paid off and replaced with a new one.
Some homeowners refinance their mortgages to take advantage of lower interest rates and a lower monthly payment. Others want to convert an adjustable rate mortgage (ARM) to a fixed rate mortgage. If you have built up enough equity in your home, you may also choose a cash-out refinance and draw out cash from your equity to reduce other debts, take a long-awaited vacation, or renovate your home.
No matter your reason, it’s best to weigh the pros and cons of refinancing your mortgage before you decide.
If you’re unsure about whether to refinance, you are not alone. Many homeowners see a drop-in interest rates or a rise in home values and immediately pick up the phone to talk about refinancing. But there are other important considerations.
The general rule of thumb is that, if you can reduce your current interest rate by 1% or more, refinancing may make sense because of the money you’ll save. It will also enable you to build equity in your home faster.
If interest rates have dropped low enough, it may be possible to refinance to shorten the loan term—say, from a 30-year to a 15-year fixed mortgage—without a significant change in your monthly payment.
You should also consider how much longer you plan to stay in your home, and weigh the cost of obtaining a new mortgage against the interest it may save you in the long run.
For example, let’s say there is a remaining balance of $150,000 on your current mortgage. To refinance, you will pay closing costs to the lender that typically range from 3-6% of the loan amount. This means you would pay between $4,500 to $9,000 to refinance.
If you pay that at closing in cash, how many months of “savings” will it take to recoup that money and make refinancing worth it? It may not be worthwhile if you plan to move in two or three years, but homeowners who want to shorten the mortgage term or change to a fixed rate mortgage may benefit.
Refinancing the loan on your home in Rochester, Michigan can be a beneficial move under the right circumstances, and Gem Home Loans can help you decide. Complete the form on our site or call us at (248)-318-2394 and one of our specialists will work with you.