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Ask the Advisor – Should I refinance my mortgage to pay my holiday bills?

Ah, the holidays.  A time when you want to spend more money than usual, but your bills and paycheck stay the same.  According to the ubiquitous ads on the radio, you should be refinancing your mortgage and all of your financial dreams will come true.

 

Is this really the case?  I went to mortgage expert Dave Majcen, Vice President of Mortgage Lending at Guaranteed Rate Mortgage, to learn about the signs that you should refinance your home loan.  Here are his tips:

 

  1. Consider time frame:  Make sure you are staying in the house long enough to recoup the closing costs and monthly savings.  If you are unsure, look into a no closing cost refinance and let the lender pick up the tab.  This way your return on investment starts with your first payment.

 

  1. Don’t go backwards.  If you have been paying on your 30 year fixed mortgage for 10-15 years, don’t go back to a 30 year fixed or you will be paying interest on top of interest.  Consider a 15 year fixed with current rates below 3% and put more towards principal.

 

  1. Use a trusted local lender.  In Colorado, appraisers won’t even accept orders from out of state lenders.  If they do, it can take months and the costs can be much higher than average causing frustration.

 

  1. If you are paying mortgage insurance, consider refinancing now.  Values in Colorado have risen substantially which will allow you to refinance and eliminate mortgage insurance and reduce your interest rate.  A win, win!

 

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Thanks for the perspective!  For more info or to see if a re-fi is right for you, contact Dave Majcen at 720-399-7065 or dave.majcen@rate.com.