It’s the go-to real estate silver lining in the response to the day-to-day difficulties during a pandemic and high unemployment numbers. These are uncertain times, but at least in upstate NY, the real estate market is brisk.

It’s a seller’s market, but if you don’t want to sell your house, you might be considering refinancing the loan you signed up for when you first bought it. Here’s what to consider before you do.

Jeff Miller, assistant vice president of mortgage sales at Sunmark Federal Credit Union, said some clients are refinancing because money is tight due to job change or loss and they are trying to reduce their monthly expenses. Refinancing at a lower interest rate over a longer period of time – switching to a 30-year mortgage for example, instead a 15-year loan, will lower the monthly payment.

“If they are struggling with current payment, they can back it out to pay less now, even if they pay more over time,” Miller said.

Daniela Bigalli, senior vice-president for sales and marketing at Homestead Funding Corp., recommended finding a mortgage lender or loan originator you feel comfortable with, it doesn’t have to be the institution that handled the first loan.

The first conversation should be about options and what you, as a homeowner, are looking to accomplish, and your long-term strategy, Bigalli said. Are you eyeing the historic low interest rate because you want to lower your monthly payment or because you want to pay off the house more quickly? Or you want to take cash out of the house to make a big purchase – put in a pool, pay for a wedding?

Keep in mind, if you refinance and take cash out, the interest rate is going to be higher on the cash loan.

“The lender will come back with options and then the homeowner can make an educated decision,” Bigalli said.

Refinancing comes with closing costs, just like your first mortgage: state mortgage tax, title insurance, recording fees, attorney fees and the cost of a credit report. It might cost several thousand dollars to refinance your home loan, so if you only plan to be in the house another few years, it’s probably not worth the cost.

Source Google News