Why and When to Refinance a Mortgage

As a homeowner – no matter what stage of your life you are in – there are often solid financial reasons to consider refinancing it. The reasons are varied but, in general, these reasons are based on your ability to get a significantly more favorable interest rate. The vast majority of financial experts recommend that a homeowner look at any potential refinanced mortgage that offers a new loan rate that is two points below their current one. While there are other reasons to refinance, this reason is the most notable – and financially prudent – one. Here is a quick rundown on why:


When you refinance and reduce your interest rate, there are several significant financial goals that you can accomplish. First, you can reduce your monthly payment – always a good thing even if you are not on a tight budget. Secondly, you can reduce the time to fully pay off your mortgage. In this instance, it is often quite possible to turn a 30-year mortgage into a 15-year one without any increase in the current monthly payments. Lastly, a refinancing can allow you to capture some or all of the equity that you have built over the years. These monies can then be used to consolidate debts, add on to your home, or plan a vacation.

Fees and Expenses

As they old adage states, “Nothing in life is free”. Refinancing a current mortgage will involve many of the same fees that were incurred in the initial financing – an appraisal, an inspection, underwriting fees, lender’s title insurance, settlement costs, and other associated minimal expenses. There may also be a prepayment penalty on your existing mortgage but these are fairly rare as lenders prefer to “front load” their fees and have them paid at the time of closing rather than having to chase them down at some later date. These fees are fairly standard but to the layman can seem quite complicated. We will be happy to help you sort through the details. Contact us at (562) 584-4408 with any questions.

Doing the Math

There are a multitude of calculations that need to be completed to arrive at the proper answer as to whether or not refinancing a mortgage is right for you. Some questions that need to be asked are:

  • How much will I initially need to pay?
  • What will be the reduction in your monthly payment?
  • What will the effect be on your income taxes?
  • Will the purchase of discount points be worthwhile in the short or long term?
  • How does my particular situation need to be considered?
The Bottom Line

Without a doubt, anytime is a good time to consider refinancing your mortgage. As the homeowner, you may have to absorb some modest upfront costs but in many cases we can roll these costs into the new loan. At Equibox Mortgage, we can help you determine what your options are, compute your monthly cost savings and any reduction in your yearly taxes. For more information or to schedule an appointment please contact us at (562) 584-4408. We will be thrilled to answer your questions about our many mortgage solutions.

When you’re ready to refinance, it’s hard to know what your best options are financially. There’s a lot of information out there. Understanding it all can be challenging. We’re here to help, and can provide some answers to your questions. Contact us today!

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