When it is right to refinance?

The General Rule

If you plan to stay in your home for longer
than the amount of time it will take to realize
your savings, it makes sense to refinance.

Who Cannot Refinance

Don’t think that you cannot refinance just because your home’s value has decreased

Many homes have lost some value in our area,
but not as much as has been reported in the press. It is a case-by-case basis. If you
have at least 20% equity in your home at its
current value, you can most likely get the
lowest interest rate available. An apprasier
will set the current value using very specific
criteria. Don’t second guess this process!

Of course, if your home is not worth the
remaining balance on your existing loan, you cannot refinance. Unless you qualify for one of the programs recently introduced by the federal government . Ask your current lender about that.

If you have done damage to your credit rating by paying late on your mortgage or have lost your job recently, you most likely will not qualifiy. A quick call to a good lender will answer that question–at no charge to you.

Good credit risks with equity of over 20%
have seen under 4% mortgage rates recently. Some lenders are offering NO FEE refinancings

The Formula

Cost ÷ Savings = Months to Break Even

Determine how many months it
will take to pay off the costs and realize a
savings. For example, if you decrease your
mortgage payment by $200 and it cost
$1,200 to refinance, it would take 6 months.

Instructions

Use the Refinance Mortgage Calculator below to determine the savings you will see at a new interest rate. Be sure you are comparing apples to apples–the same term (15 or 30 years, for example) and the same type of rate (fixed, not adjustable). Then, take the costs given to you by your refinancing lender to divide by the savings. This is the number of months it will take to pay off the costs and realize a savings.

  1. Enter the principal balance amount from your current mortgage and the new interest rate.
  2. Enter the costs given to you from your refinancing lender. They are comprised of 3 numbers: lender fees, appraisal cost and title insurance premium. DO NOT include any pre-paid interest to the end of the month or any escrow amounts for taxes and insurance. You should shop for the lowest costs. Lender fees should be close to $1,000, appraisal fees around $400. Title insurance for the lender will be the biggest number. It is a state-mandated amount, but discounts exist if you have a policy less than 7 years old or if you use an approved attorney. (On a $400,000 loan, title might cost $1,400). Don’t assume the lender’s title company is giving you the best rate. Shop around. You are legally entitled to have your own title company. Contact us for referrals to good title agents and lenders–we have no affiliation with any of them. Some lenders are offering NO FEE refinancings. Rates might be a bit higher, though.
  3. The answer is the number of months it will take to start seeing your savings. Try it below.

The Refinance Mortgage Calculator

Creating-a-Budget

Featured Listings

Character, opportunity and an incredible location.
$595,000
562 Hilaire Road
Wayne, PA 19087
MLS# 7027172

 

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Hear From Our Clients

  • "We were so pleased that a co-worker recommended someone in the area that she trusted. Boy, did we strike gold on all counts. You are amazing!"
  • "Instead of trying to take advantage of conflicts of interest, she puts the client's interests first."
  • "Linda is a hardworking, proactive and knowledgeable realtor. Throughout the process of finding and buying our new home, she was always responsive and kept us up to date on every detail."
  • "Linda and the group at Sage are the right fit. You won’t find more knowledgeable, prepared and professional agents."
  • "Linda and Tracey really know the Main Line area."
  • "Throughout the entire process we never doubted that she always had our best interests in mind. We wouldn’t consider anyone else when buying a home on the Main Line."
  • "From start to finish, Linda brought to bear a most helpful combination of experience, knowledge, attention and integrity on a somewhat complicated transaction. There was never any doubt that she represented our interests."
  • "Her knowledge of the area helped us quickly narrow our search and ultimately scored us an amazing home in an incredible neighborhood."
  • "It is hard to trust when you are not sure of the rules of the game. Working with Linda made us feel like we were family. Linda took her time to relay and explain everything in detail."
  • "Linda’s honesty and real estate savviness made for a wonderful home buying experience!"

Read more about what our clients have to say

Hear from our Clients

  • "We were so pleased that a co-worker recommended someone in the area that she trusted. Boy, did we strike gold on all counts. You are amazing!"
  • "Instead of trying to take advantage of conflicts of interest, she puts the client's interests first."
  • "Linda is a hardworking, proactive and knowledgeable realtor. Throughout the process of finding and buying our new home, she was always responsive and kept us up to date on every detail."
  • "Linda and the group at Sage are the right fit. You won’t find more knowledgeable, prepared and professional agents."
  • "Linda and Tracey really know the Main Line area."
  • "Throughout the entire process we never doubted that she always had our best interests in mind. We wouldn’t consider anyone else when buying a home on the Main Line."
  • "From start to finish, Linda brought to bear a most helpful combination of experience, knowledge, attention and integrity on a somewhat complicated transaction. There was never any doubt that she represented our interests."
  • "Her knowledge of the area helped us quickly narrow our search and ultimately scored us an amazing home in an incredible neighborhood."
  • "It is hard to trust when you are not sure of the rules of the game. Working with Linda made us feel like we were family. Linda took her time to relay and explain everything in detail."
  • "Linda’s honesty and real estate savviness made for a wonderful home buying experience!"

Read more about what our clients have to say

Sage Buyer Tips

Use Sage Buyer Tips to research the Main Line and stay up to date on real estate news. This online destination is chock full of resources for buyers and sellers: you can see our Main Line communities or explore Sage favorite places. Browse properties here and search other Main Line real estate. With Sage’s advice and experience, first-time buyers and those looking to upgrade can find homes best suited to their needs.