Deciding to refinance your home is a big decision because the process accompanying a refinance resembles the same procedures followed when initiating your original purchase mortgage. You'll again need to submit an application, have credit reviewed and obtain a new appraisal for your home.

Refinance costs and the associated potential savings should be evaluated based upon how long you plan to remain in the house to help you determine the financial benefits of this decision.

For example, if refinancing could save you $200 per month and the refinance fees cost $2,500, it would take a year before true savings started.   Generally, the longer you remain in the house, the more money you'll save in the long term.  So, should you plan on selling in the near future or may be eligible soon for a better job in a new area, refinancing might not be as beneficial as the monthly savings indicate.

Here are a few fees that come with refinancing:

  • Application Fee
  • Appraisal Fee
  • Underwriting
  • Recording
  • Credit Report

Some simple guidelines for deciding to refinance include:

  • Consider refinancing to reduce your monthly payments and lower your interest rate.
  • Consider refinancing to reduce the term of your loan.
  • Consider refinancing to consolidate debt.
  • Consider refinancing if the interest rate is more than two percent lower than your current rate.

Keep in mind that these are not hard-and-fast rules since each situation has its own unique elements to consider. Contact me today if you would like assistance and I will be happy to answer any questions you may have, and/or help you determine the value of your home.

Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs

[email protected]

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.

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