Consumer Advice

Refinance: When is the right time?

When is it the right time to refinance? The answer depends on the personal and financial reasons that you are considering doing this.

Many common reasons why people decide to re-finance their mortgage include:

• reduce their monthly payments
• consolidate debt combine first and second mortgages
• convert from a 30-year to a 15-year loan
• change from a variable rate to a fixed rate

The traditional rule of thumb is that you should reduce your current rate at least 2 percent. This is often wrong. Why? Waiting for a 2 percent reduction before you consider refinancing can actually cost you money. For some, as little as one-half percent can be enough if all other factors fall in place. The only way to determine if it is the right time for you is to analyze time and cost factors.

What is your time frame? How long do you plan to stay in your home or hold onto your current mortgage? You may have a product that demands refinancing. For example, your time frame on a balloon mortgage would be when the balloon period runs out. If you do not have a product like this, your time frame can be as long as you plan to stay in your home. When determining your time factor, it is crucial to be honest with yourself, since the time factor will determine if and when you will begin to save money. By recouping your closing cost, you will save money for the length of time you plan to stay in your home. Evaluating all the possibilities is vital, and only you know what your time frame will be.

At 1st State Mortgage, we will help you evaluate all these factors and make you a recommendation. There is never an application fee or any up-front cost. We give the consumer all the information they need to make the right decision. We feel it is our obligation to provide this service, because it gives us the opportunity to work for you.

1st State Mortgage Company
One Huntington Road, Suite 201, Box 107
Athens, GA 30606
706-546-9870