Housing Market: Is refinancing worth it?

Housing market pt.4 Refinancing

BIRMINGHAM, Ala. (WBRC) - A lot of people are buying homes right now because of historic low interest rates. Some are also using the low rates to refinance their homes. But is it worth it?

Amanda Jordan and her family recently decided that refinancing their mortgage was the right move.

“We saw how much equity we had going in the house, so we just decided to take advantage and just do a refinance with no cash out,” Jordan said.

Jordan says their payment really did not change because they went from a 30-year fixed rate to a 20 year. But their interest rate dropped from 3.9 % to 2.65 %. They’re saving about $100 dollars a month and shaved eight years off their mortgage.

“We’re going to be able to pay off our home in 20 years and hopefully that will be around the time our kids finish college. We’ll have a house paid off. It’s just a great feeling knowing that we’ll have that financial freedom a whole lot sooner,” Jordan said.

Historic low interest rates are driving everything right now. Pam Koehler is a senior loan officer with Fairway Independent Mortgage. She’s staying busier than ever.

“It’s a great time to purchase. It’s a great time to refi. It makes the homes more affordable. It makes the payments more affordable. It’s been a busy, busy season,” Koehler said.

While refinancing may be a good way to possibly lower your monthly payment and save some money, it’s not for everyone though. It can be costly because of closing fees and other charges.

Koehler always asks her clients what their needs are first.

“You want to make sure that based off the cost of the refinance, will you break even before you get ready to sell your home? If you’re not going to break even then there would be no reason to add additional costs back into your mortgage balance,” Koehler said.

While refinancing is great, Koehler says purchasing a home may be even better. She works with a lot of first time home buyers, repeat home buyers and people who are upsizing or downsizing their homes.

“If you’ve thought about refinancing, who knows it may be a great time to put your house on the market and buy another home and maybe your payment won’t go up and if it does, it’s very little. And then again, it may not go up at all just because of the affordability that the payments are with the lower interest rates,” Koehler said.

Starting in December, refinancing may cost you more in fees with the new “adverse market fee” the government is adding, but Koehler says she wouldn’t let that hold anyone back. Just keep that in mind if you plan to make any money moves with your home.

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