BOULDER, CO, Apr 19, 2024—When mortgage rates drop, many existing homeowners decide to refinance, which essentially means they can replace their current mortgage with a new one to lock in a lower rate. This can lower their monthly payment and knock thousands off in interest fees for the life of their loan. While this sounds great, refinancing is a complicated process, and it's important to fully think it through.
“If you expect to sell your home relatively soon, you are not likely to recoup the costs you incurred to refinance,” says Phil Boren, Broker Associate of RE/MAX of Boulder, Inc.. “And if you are more than halfway through paying your current mortgage, you probably will gain little by refinancing.”
But if you're going to be in your house for another five years or more, and you still have a long term left on your mortgage, refinancing may help you realize real savings as a result of lowering your monthly payment.
“During the most recent refinancing boom, many homeowners refinanced their home loans two or three times within relatively short periods of time because interest rates kept treading downward, making it extremely attractive to trade in one loan for another,” explains Boren.
“Just remember that refinancing is basically like applying for a mortgage all over again. Each time you refinance, you will still have to go through the application process, get a home appraisal, and likely incur closing costs.”
Also, Boren explains, if you have a pre-payment penalty clause in your present mortgage, you will have to pay that penalty if you refinance.
Your lender may be on your side. “Many lenders will let you roll the costs of the refinancing into the new note and still reduce the amount of the monthly payment. Plus, there are no-cost refinancing deals available,” says Boren.
Before you decide to refinance and snatch up that lower rate, crunch all of your numbers and be certain that it is actually worth it.
For more information on real estate, please contact RE/MAX of Boulder, Inc. at philboren@gmail.com, 303-441-5647, or RE/MAX of Boulder, Inc..
Phil Boren is a 26-year veteran real estate Broker and Realtor, specializing in consulting with buyers and sellers in Boulder, CO and along the Front Range of Northern Colorado. Held Real Estate Broker's license in Texas, California and Colorado; Managing Broker for over 200 agents and Brokers for Century 21 and RE/MAX franchises. Award-winning Realtor with experience in management, sales, marketing, relocation, appraisal, REO, BPO's, foreclosures, short sales; previously held the MAI designation from the Appraisal Institute. Experienced in both residential and commercial real estate and achieved the No. 14 individual ranking in the 5-state, Mt. States Region for RE/MAX International in 2001, based on sales volume. Received my BSBA in Finance and Real Estate from the University of Arkansas in Fayetteville, where he was a 4-year starter and 4-year football letterman for Hall-of-Fame coach, Lou Holtz.