refinance Q and A podcast

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Interest rates are at historic lows and many home owners are looking to take advantage of these rates. So, did you refinanced your mortgage before rates dropped to their current levels? Are you considering refinancing your mortgage now?

If so, then this recent podcast I recorded might be helpful for you. Below is a brief transcript of the Q & A interview, but listen to the entire podcast for more of details on when to refinance and options that are available.

Q: When is a good time to refinance a mortgage?

A: There is no exact rule of thumb because it depends on a client’s specific situation. That said, once the interest rate is a half point lower than their current rate, it is worth the time to make a call to learn about available options.

Q: What factors should one consider when refinancing?

A: The primary determining factor will always be how long one plans to remain in the home. If a refinance could save you $200 a month BUT the break even point (closing costs / monthly savings) is 24 months AND you plan to move in a year, then the numbers indicate it might not make sense to refinance. I have found that most clients can safely estimate the next 3 years, so if the break even point is 36 months or less, people tend to move forward with the refinance.

Q: Please explain no closing cost loans?

A: In truth, no closing cost loans do not exist. There are always closing costs, it just depends on how one wants to pay them. Here are some of the options:
– pay closing costs at the table (only happened once in my career)
– roll closing costs into the loan amount (most common way to refinance)
– agree to a higher than market value interest rate and “pay no closing costs”

By agreeing to a higher interest rate, the lender will provide the funds to cover the closing costs for the refinance. The borrower may not pay for the closing costs at the closing table, but will pay more each month over the life of the loan because they agreed to a higher rate for the refinance. In some shape or form, the borrower will “pay” for closing costs – either up front OR every month they make a mortgage payment.

Q: Should one go with an ARM or Fixed mortgage?

A: The answer goes back to how long someone plans to stay in the home. ARMs are currently in the mid to low 3’s. If you only plan to stay in the home another, say 4 years, a 5 year ARM would be fixed for all the years this person plans to remain in the home and might be a better option (and today a better rate) than going with a fixed mortgage.

In short, answer the question “how long do you plan to remain in the home?” and it is easier to find the loan program that is best for you!

Q: Any loan programs available for home owners underwater on their mortgage?

A: Yes, the US government passed a bill called Making Homes Affordable for home owners who acquired their current mortgage prior to February 2009. There are some specific items a borrower must meet to qualify, but is a great program for those that do qualify. I’ve blogged about this loan program in the past, and will be glad to answer any questions about the Making Homes Affordable program.

For more information on getting prequalified to refinance your existing mortgage (if you are in Georgia), don’t hesitate to contact me!

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One Response to “refinance Q and A podcast”

  1. on-r Says:

    nice to meet you… you have a nice posting..have a nice day… 21:26

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