When Is a Good Time to Refinance Your Home? By: Marilyn Allena, John Bartolotta, Mary Foster, Barry Gerst, Cheri Krusen, Arthur Reinertsen, Jr. and Daniel Tripodi, Mortgage Loan Officers, Affinity Federal Credit Union Homeownership can result in a dizzying amount of obligations and expenses. For many homeowners, refinancing can be a viable option to assist with restructuring finances. However, before making this decision, there are a few things that you as a homeowner, whether experienced or inexperienced, should know when deciding whether it’s a good time to refinance your home. For starters, what exactly is refinancing? Refinancing is the act of obtaining a new loan in order to pay off your existing loan. Oftentimes, people seek to refinance their mortgage to obtain the following goals: Pay for necessary home renovations with the loan Switch to a lower interest rate: A lowered interest rate can equate to more money in your wallet Lock in a shortened loan term (15 years vs. 30 years) Obtain a different loan type (i.e.: an adjustable rate to a fixed rate) that is better aligned with your overall financial goals Tackle or consolidate outstanding debt, especially if the refinanced mortgage offers a lower interest rate What does the mortgage refinancing process look like? First of all, it’s important to speak with a trusted Mortgage Loan Officer who can discuss the best mortgage program and your available options. You should speak with your Mortgage Loan Officer about having all the necessary financial and legal documentation to ensure as smooth a process as possible. This will enable you to close in a timely manner. There are also costs involved in refinancing such as the closing costs, but it’s recommended to always do your homework and try to avoid paying junk fees1. Junk fees are an industry term that refers to certain fees some financial institutions charge, including processing, origination, application, and underwriting fees, which can quickly add up. At Affinity, we do not charge our members these fees. Getting started: Homeowners should schedule an appointment with a Mortgage Loan Officer. Homeowners should make a list of their refinancing goals and compare these to the involved costs and overall savings anticipated from the refinancing. It’s a good idea to cross-compare the interest rate that you are paying now and the costs of refinancing to make sure that it would be financially beneficial to refinance your mortgage. Lastly, ask yourself, “What do I want to gain?” Is it extra funds to pay off debt or overall savings, or combined reasons? Make sure your refinanced loan will help you to reach your goals. Reasons why it might not be a good time to refinance your home: For some, there may be certain obstacles which prevent them from refinancing their mortgage. These include not having enough equity in their home, living on a fixed income or if they are about to sell their home. Another reason people may hold back from refinancing is concern about the associated costs. If there are reasons which you think may prevent you from refinancing your mortgage, you can always double check by asking an Affinity Mortgage Loan Officer. Affinity also offers portfolio lending with flexible underwriting. We strive to make it easier for our members to obtain financing even in the toughest times, and are here to help you navigate this complex process. You’ll find a trusted advisor in your Affinity Mortgage Loan Officer. Aside from possibly saving money and obtaining a more desirable term, refinancing can be an advantageous decision for homeowners. If you are looking to refinance, make sure you evaluate all options and know all the costs upfront. Affinity’s Mortgage Loan Officers have decades of experience coaching our members on refinancing, and can walk members through all the costs, benefits and term options. * Affinity MLO NMLS Information: Marilyn Allena, NMLS #: 90624 John Bartolotta, NMLS #: 144574 Mary M. Foster, NMLS #: 209810 Barry Gerst, NMLS #: 244987 Cheri Krusen, NMLS #: 1625696 Rosa Phelps, NMLS #: 1211267 Arthur Reinertsen, Jr., NMLS #: 350399 Daniel "DC" Tripodi - NMLS #: 138251 1 Consumer Reports This information is for informational purposes only and is intended to provide general guidance and does not constitute legal, tax, or financial advice. Each person’s circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments regarding the matters related to your condition are made.