Refinancing

Mailboxes have been overflowing with mailings from mortgage companies telling homeowners, "Now is a great time to refinance your home…and do it with us!" Anyone who"s following current events knows that mortgage rates are historically low, but is refinancing now the right choice for everyone? Bank of Luxemburg sorts it out for you.

There are several things to consider before deciding to refinance your home.

1. How long do you plan to be in your current home?

The longer the length of time you plan to be in your current home, the better, when it comes to refinancing. Reason being? With a longer stay in your current home, you may recoup expenses that could arise from the re-fi. If you’re planning a move in the near future, the costs associated with a re-fi might not offset the costs associated with moving.

2. Have you or your spouse had a recent change in job, schooling, or life in general?

A job change could mean a salary cut. Going back to school and the expenses associated with it might negatively affect those monthly expenses. Other changes like having a child or an elderly parent to care for could also cause a spike in expenses. With all these instances, having a reduced mortgage payment for the long haul might be worth the up-front expenses incurred with refinancing.

3. What is the current rate you are eligible for?

Take a look at the mortgage rate you currently have, and contact a mortgage lender to see what your new rate could be. The mortgage lender can advise you as to whether or not the rate difference is significant enough to benefit you.
Drum roll please…If you decide based on the above criteria that now IS the right time to refinance, here’s“the work” involved on your end.

1. Check your credit score (and your spouse’s credit score if you’re refinancing jointly).

Your mortgage lender will do this when determining your rate, but it doesn’t hurt to check in advance and make sure you are aware of your score and the reasoning behind it.

2. Request copies of (or locate) paperwork ahead of time.

In a paperless age, you’ll still need to locate hard copies of your (and your spouse’s) last two pay check stubs, your last two checking account statements, and if applicable, your last two savings account statements. You’ll also need your existing mortgage paperwork and property tax information. Keep all documentation clearly labeled and organized to make the refinancing process smooth and simple.

Refinancing can be a great choice for some people right now, but it’s important to ask the correct questions and make sure it’s the right thing for you. It’s also smart to be prepared for the legwork involved on your end, so there are no surprises once you get embroiled in the refinancing process. Speak with a mortgage lender you know and trust before beginning the process, and we at Bank of Luxemburg are always willingto help.