Sunday, April 6, 2008

When is it a good idea to refinance?

Dear Rich,

We are in an ajustable rate mortgage and we would like to refinance our home in Charlotte. Do you think this is a good time?

Kevin R. - Charlotte, NC

Dear Kevin,

If you have an adjustable-rate mortgage (ARM), like many people right now, refinancing may be a good option. With the volatile market, there is a good chance that your rates will rise. So to avoid paying more every month -- or you want the security of knowing exactly how much payments will be in the future, this may be a good time to consider refinancing to a fixed-rate mortgage. Rates are generally good right now and if you have good credit, then this is at least worth investigating.

If your credit is poor, then I recommend working at repairing that for the next several months (or longer...) before you try to refinance. Not only will you have a better chance of getting the mortgage, but the rates will be lower.

Remember, you will need to consider the cost of refinancing into your decision, including the application fees, the closing costs, and possibly prepayment penalties. After that, you will need to measure out against how much longer you continue to live in your present home here in Charlotte.

In short, the answer is that this is a good time in general to consider refinancing, especially if you are in an adjustable rate mortgage. See your mortgage broker to get a quote, or contact me, and I can recommend someone in the Charlotte area.

Best of luck,
Rich Ferretti

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