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Hi, this is Robert Mangino with Mike Henry, Vice President of Dollar Bank Residential
Lending. And we're here to talk about refinancing.
Mike, when should someone consider refinancing their mortgage? Well, people will often ask me,
"Is there a rule of thumb as far as an interest rate drop that would make it worth looking at refinancing?"
We typically say 1 to 1.5% is when you should take a look at it.
You have to look at the total cost, how long it will take to recoup those costs
and how long you actually plan on staying in the house.
When should someone consider a no closing costs mortgage,
even if the interest rate's higher?
Well, again it would go to how long do you plan on being in that house? Because with no costs,
you could still take advantage of a lower rate.
For example, we have 10 and 15 year home equity products which have little
to no closing costs
which can be a great benefit if it's going to be a short-term situation,
if the interest rates if you anticipate they're going to drop further,
you don't have to keep paying the closing costs.
Typically on a lower loan amount it works
well, too, than
paying all the costs
that are fixed with a traditional mortgage. When is refinancing with an
adjustable rate mortgage more beneficial?
Well, we would look at,
if you plan on staying in the house a
short amount of time, there really isn't a reason to pay a 30 year fixed
rate when you can get a discounted rate for three to five years.
If you were using a three or five year adjustable rate loan where the rate is
fixed for those periods of time. So if you have a five year ARM,
the rate is fixed for five years, even though the loan is advertised for 30.
So if you're going to be in there less than five years, there'd be no
reason to pay the higher rate.
Thank you, Mike. For more information, contact a Dollar Bank mortgage expert
at 1-800-344-LOAN or visit dollarbank.com.