Refinancing You Mortgage Loan In the Greater Boston Area – When To and When Not To

Refinancing your mortgage loan in the Greater Boston Area can possibly save you a lot of money and allow you to switch the characteristics of your loan to suit your needs and requirements. If, however, it is done without proper planning and research on the finances involved, you might end up spending more than you save.

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Common Reasons for Refinancing a Mortgage Loan

  • Opportunity to a lower interest rate
  • A chance to shorten the loan term
  • Chance to use the equity of the house
  • A need to change the characteristics of the loan

The above reasons are all good because they will help you save a lot of money and allow you to build up home equity faster. You must understand that the procedure to be followed is exactly the same in that you will need an appraisal of the house, pay the application fees, get a title search done etc. Overall, you will end up paying around 3-6 percent of the principle amount of the loan.

Refinancing In the Greater Boston Area – When to Do It

  • Lower Interest Rate: The prevalent interest rates keep changing according to a number of factors. If you find that the interest rate has fallen by around 2%- 3% (The general rule of thumb is 2%) then it may be worth your time and effort to refinance. It could be that you will save a lot of money on your monthly payments and build up equity faster. But if the fall has been only 1%, then you will have to do the math to find out how much you will actually save.
  • Shortening The Term Of the Loan: When the rate of interest falls, it allows for switching to a loan with a shorter loan period while still paying roughly the same amount as monthly payments. This will save you a lot of money, allow you to own your house faster.
  • Changing The Characteristics Of the Loan: Whether you have a need to switch from an ARM (adjustable rate mortgage) to a more stress free fixed rate mortgage or the other way around, if you find that the switch will save you money and or stress then it can be a good reason to refinance.

Refinancing In the Greater Boston Area – When Not ToRefinancing is not always a good option, so make an informed decision to ensure that you do not regret your decision in the future.

“How much money will I actually save by refinancing?” That is the main question you must ask yourself when you think of refinancing. If the answer is a significant amount then it might be a good idea to refinance your mortgage in the Greater Boston Area. If you find that the amount saved is pennies and dimes or if you find that you end up spending more than you save, then it’s probably not worth the time and effort you will have to put into the process.

Lender Tip: Not Sure On Refinancing? Ask a Boston lender to do a cost/benefit analysis on refinancing your home/mortgage.

Phil Ganz (354 Posts)

Philip D. Ganz is a Boston Mortgage Broker and Boston Home Loan specialist. For information, expertise, consulting, or advice about home loans, refinancing mortgages, or commercial property loans, contact Phil with no obligation: 617-529-9317

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