By Vickie Perry
That’s right, a physical for your mortgage. When was the last time you took a look at your mortgage? I don’t mean simply writing your monthly check, I mean truly looking at your current term, your interest rate, and your current balance. A common mistake among homeowners is applying for a loan, buying their home, and not keeping track of industry changes that could positively affect their mortgage.
A question I am commonly asked these days is “should I be considering a refinance?” The answer isn’t as cut and dry as one would think, however, with interest rates so low, I think everyone should at least meet with their licensed mortgage professional and have a ‘mortgage physical’. This type of physical is painless and could potentially save you a couple of hundred of dollars each month and thousands of dollars over the years.
When conducting a mortgage physical, an experienced lender will analyze your current term, in conjunction with the rate you are presently paying. If you have a 30 year term and only have 20 years remaining, it might not be wise to refinance back to a 30 year, but a 20 year option might be perfect. Even a 15 year might be suitable to your needs. Are you expecting to pay off your loan soon? A 5 year ARM (adjustable rate mortgage) might be what you are looking for.
Interest rates also play a huge role in determining the pulse of your mortgage. Last week I was approached by a couple who has a rate of 6.5% on their home loan. After a lengthy meeting, we determined we would be able to cut their loan term in half, as well as cut their interest rate in half. Now, this family will own their home in 15 years while saving money each month. They hope to use this new found income to save towards a long awaited family vacation. When I showed them how many thousands of dollars they would be saving over the life of the loan, the woman cried tears of relief and asked her husband why they didn’t do this a few years ago.
Another common misconception is you must save a full one percent on your interest rate before refinancing is worth it. Again, this is a common misconception. For example, if you are currently paying expensive mortgage insurance each month, there might be a program available to eliminate the mortgage insurance. Even though your rate doesn’t drop a full one percent, the elimination of mortgage insurance could save you a few hundred dollars each month. Remember, mortgage insurance isn’t for your protection, it is to protect the investor. Why pay it if you don’t have to?
The purpose of this article is to get you thinking about your current mortgage. What might have been the perfect loan option when you initially purchased your home is probably not the perfect loan option for you now. Why not call your favorite licensed mortgage professional and find out? It typically doesn’t cost you a dime to inquire. That’s right, a FREE physical. Where else can you find something for free that might ultimately result is substantial savings for you?
Vickie Perry (#AK195996 / #AK167729) is Branch Manager of Residential Mortgage, LLC, in Juneau. She can be reached at (907) 789-2329. Visit her website at www.vickieperry.com.