Countrywide Home Loans Highlights Refinance Factors

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Mortgage Tips That May Make or Break the Rewards of Refinancing

Countrywide Home Loans, Inc. has outlined factors for homeowners to consider when determining if the timing is right for a mortgage refinance. Through a straightforward, three-part formula, Countrywide aims to help homeowners simplify the decision-making process and make informed choices about their refinancing options.

"Playing the guessing game when it comes to interest rates can lead to missed opportunities to refinance a home loan, so the key is to consider the entire picture and take action--which could be as simple as contacting a local home loan expert for help," said Greg Lumsden, senior managing director and president of Countrywide Home Loans' Full Spectrum Lending Division. "Because there is no crystal ball for the mortgage market, homeowners' insights into their own current and future situation can often be much better indicators than the experts' financial forecasts."

Countrywide has outlined three basic principles that homeowners may use as a starting point when weighing their home loan refinancing options:

1.    Dollars and sense. Common sense can be a very effective tool to help determine refinance timing: homeowners can simply assess whether the benefits of refinancing outweigh the dollars spent on the transaction and the total amount to be paid when compared to their current situation. An online refinance calculator can help homeowners crunch the numbers, but "benefits" do not need to be limited to monthly payment savings. For example, a cash-out refinance can provide an extra source of funds, which may be an advantage even if the monthly mortgage payment stays about the same.

2.    The magic number. While some may say that homeowners should only refinance their home loan if the new interest rate is one or two percentage points below the current loan's rate, there really is no magic number. Often, more pertinent numbers are how many years the homeowner plans to stay in the home and how long it will take to recoup the upfront costs of the refinance.

3.    Market vs. individual circumstances. The ebb and flow of the mortgage market may not necessarily coincide with each homeowner's unique situation, so a decision to refinance should rest largely on individual needs and goals. For example, if a homeowner plans to move within a few years, refinancing from a fixed-rate loan to an adjustable rate mortgage (ARM) may make sense because they can take advantage of lower introductory interest rates, then sell their home before the rate is scheduled to adjust. Conversely, homeowners who currently have an ARM may consider refinancing to avoid adjusted rate increases.

For more ideas on when refinancing may make the most sense for individual needs, homeowners can speak with a home loan expert at 1-800-508-0794 or visit us on-line.

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Kris Yamamoto
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