Kathy Orton, The Washington Post
Mortgage rates have hovered near three-year lows recently, leading many homeowners to wonder if now is the time to refinance. I asked Craig Strent, CEO and co-founder of Rockville, Maryland-based Apex Home Loans, one of Washington’s largest independent mortgage banking firms, what they should keep in mind before refinancing their home loan. Our conversation has been edited for clarity and length.
Q: What should I consider when deciding whether to refinance my mortgage?
A: Consider how many years remain on the loan you have and how much longer you will stay in your home. From there, look at the costs of obtaining a new loan compared to the amount of interest it will save you. Be careful not to base your analysis just on the cash-flow savings. Lowering your interest rate but resetting the loan to 30 years without having a plan to leverage the savings on the refinance may cost you more in the long run. A homeowner expecting to move in the next couple of years probably does not need to refinance. Homeowners in adjustable rate mortgage loans and those homeowners with private mortgage insurance may want to take advantage of low interest rates to reset their ARM, move into a fixed rate, and/or remove or reduce their mortgage insurance.