Should I Refinance Now?

The answer to the question “Should I refinance now?” depends upon the answers to three subsidiary questions. What type of mortgage you have now is perhaps the most important. In California, as around the nation, in the past few years there has been an explosion of innovative mortgage offerings. The standard 30 year fixed rate mortgage has been supplanted by huge numbers of different options, one or more of which might be better suited to your circumstances. Perhaps an adjustable rate is better for you, or a shorter term?

Continue Reading

A second thing to think about when considering if you should refinance now is whether your own circumstances have changed. Perhaps you got your first mortgage when you had a bad credit record? If so, refinancing will almost certainly bring down your monthly payments if you now have a better credit record. The economy of California has changed enormously in recent years as well, as have house prices. Perhaps your original mortgage was 100% financing? With the recent rise in prices, if you refinanced this would now be a 70%, or even 50% mortgage. This would both bring your rate down and allow you to stop paying for mortgage protection insurance, leading to a big saving.

The third part of the “should I refinance now?” question is whether there is something else that you want to spend money on. Mortgages are almost always the cheapest form of borrowing so if, perhaps, one of the children wants to go to California’s finest (say, Stanford) then a refinance might be the best way to pay for this, at least for the costs that they cannot get a student loan for.

There are so many options possible and reasons to do so that the answer, in reality, to the question of “should I refinance now?” is somewhere between maybe and probably and your mortgage broker will be able to help you work out which.