If you’ve lived in your Oak Shores or Heritage Ranch home for a few years or more, chances are you’ve considered the option of refinancing your home. With today’s low interest rates, it can be tempting to want to refinance in order to take advantage of these historically low rates. But is refinancing the right choice for you?
As a Lake Nacimiento Real Estate agent, I’m often asked this question and I wanted to shed some light on how to determine if refinancing will be beneficial to you. Whether you’re hoping to live in your Oak Shores or Heritage Ranch home for many more years, or you’re considering the option of selling your home; below are six great ways to decide on if you should move forward with refinancing.
1. Interest rates– Refinancing right now is great for homeowners whose current rates are above 5.5% and are hoping to save on their monthly mortgage costs. For an Oak Shores or Heritage Ranch home, you could potentially save a percentage point or more on an outstanding mortgage.
2. Credit score and income– Most banks in today’s market will require you to have a minimum credit score of 620 in order to refinance. You will also need to prove that your household finances have been stable. If unemployment or other issues have come up that have decreased your finances significantly; you’ll find it hard to refinance.
3. Costs– Refinancing your home will cost you typically 2% of the new loan amount. This includes application, appraisal and inspection fees. Included within refinancing costs is the new escrow account you’ll need to fund. The lender will set up this account for home-insurance and property-tax payments from which they’ll draw annually. Want to avoid this fee? Use the same lender you used for your initial mortgage. Their only costs are limited to issuing new paperwork, so they’re able to keep costs low and can oftentimes speed up the process. Another option is a good faith estimate. Your Lake Nacimiento Real Estate agent can help you determine which option would work best for your home.
4. ‘Underwater’ homeowners– Today’s housing market has left around 11 million homeowners “underwater” meaning they owe more on their home than it’s actually worth. They will have a hard time refinancing and can only do so through a federal program. Your Lake Nacimiento Real Estate agent will help explain the option of a “short refinance” that was launched by the FHA.
5. Adjustable-rate mortgages– Determining whether you’d like to go with an adjustable-rate mortgage or a fixed-rate mortgage can be tricky. An ARM can be a good choice for today’s market as you’ll cash in on the current lower rates, but can be unstable in the long run. However, a fixed-rate mortgage ensures that your rates will remain stable and won’t rise if the market changes.
6. Greater pricing disparity– Based on your current credit score, the rates offered for refinancing can vary greatly. Lenders will look at California’s average loan-to-value ratio and the percentage of homes with negative equity. The higher the percentage of these homes, the higher the rate a borrower will most likely be offered.
If you have any questions about these factors, or are ready to sell your Lake Nacimiento home, please let me know! I have years of experience with buyers and sellers on Lake Nacimiento and can ensure that the sale of your home will be a smooth and efficient process.
Please feel free to contact me today to get started!
Your Local Lake Nacimiento Real Estate Expert
Oak Shores Realty
Oak Shores Realty specializes in Oak Shores at Lake Nacimiento properties. Please contact us today to get more information on Lake Nacimiento lake homes. Oak Shores Realty can also provide you an insiders “Lake Nacimiento Buying Guide” with great information including maps and market information.
Please let us know how we can help!