Is It Time for Mortgage Refinancing of your ARM?

Those with adjustable rate mortgages should be familiar with two facts:

1. Monthly payments are affordable during the first few months (sometimes, years) of your home loan
2. When rates reset, you should consider mortgage refinancing.

The initial reason listed is probably the reason you signed up for this sort of home loan in the first place. But maybe now it’s time to consider the second point made above - before mortgage rates spiral out of control, is it time to lock in the lowest figure you can?

Here are factors to consider as you do:
The difference between the reset monthly payment on your existing adjustable rate mortgage and the amount you would pay on a new mortgage is the most obvious factor to consider - but it’s not the only one.

Other considerations might include the caps and adjustment periods on your current mortgage, the outlook for higher (or lower) interest rates, the cost to you in time and money to obtain a new mortgage and how much longer you expect to own your home.

Notes on a new, refinanced mortgage:
A new mortgage can cost thousands of dollars and take many hours to research, apply for and close. Fortunately, our brokers are here to help with these details.

Think about how long you plan on residing in your current house, as well. If you expect to sell your home within a few years, the benefits of a new mortgage might not justify the outlay of time and money. That’s especially true if you itemize your income tax deductions because a higher home loan payment could be partially offset by a bigger break on your taxes.

Moreover, if you refinanced into a new loan that wouldn’t be paid off as quickly as your existing mortgage, you would have to make more payments in the future. For instance:

• You could refinance from a 15-year adjustable rate home loan into a 30-year fixed rate mortgage. Your rates may remain constant, but the length is now extended. What impact will this have on your budget?

That’s the sort of question we can help answer. Only you can decide if it’s time to refinance - but we can outline all the possibilities and ensure this is as simple a decision as possible to make.