Savings Tips / Buying a Home / Budgeting

Is Now A Good Time To Refinance Your Home?

Words by Abbie Dyer on May 16, 2021 1:07:00 PM

Another season of change is upon us. With the fluctuating interest rates on home loans, it might be a good idea to consider changing up your mortgage this year. While there are advantages to refinancing your home, you should take several factors into consideration to make sure it’s the right financial move for you and your family.

Understandably, people are excited about the rate changes in the housing market. Lower rates can make homeownership more affordable for first-time homebuyers and could help seasoned homeowners save money on their existing loans. Before you refinance your mortgage, review your monthly budget, and think about your financial goals for the next few years. Do you plan to move soon? Is it more important to save money on monthly payments or over the life of the loan? These are important questions to ask yourself before applying to refinance your home1.

For a limited time, only pay $99 in origination fees when you close on your home loan.3 That's an average savings of $981.2 And we’ll also donate $99 to a local Michigan housing nonprofit.4 Together, we can make Michigan feel a little more like home for everyone. Visit laketrust.org/powerof99 to view program details. 

Think about the different factors that accompany this financial decision to determine if refinancing your mortgage is a good option for you.

Can you lower your monthly payment?

Refinancing might allow you to lower your monthly payment if you qualify for a lower interest rate than your original mortgage. If you’re paying private mortgage insurance (PMI) each month, you might be able to drop this additional cost and lower your payment when you refinance.

Use a mortgage calculator1 to get a rough idea of how your monthly payment might change with a new term and/or interest rate. If your payment will decrease significantly, refinancing might be a good idea to help you save money each month.

Is it time to switch to a new mortgage company?

After going through the mortgage process and building a relationship with your mortgage officer, it can be a little heartbreaking when your home loan is sold to another company right after you close. Over the life of your mortgage, you might work with several financial institutions, and it can be stressful to set up your payments again and determine who to contact if you need help.

Before submitting an application, ask your potential lender if they’ll always service your mortgage. When you work with us and our partners at Mortgage Center1, you’ll always make your payments to the same place. 

Do you want to shorten your term?

Oftentimes, when you shorten your loan term, you can save significant money over the life of your loan. Sometimes refinancing a mortgage with a shorter term gives you access to the lowest possible interest rate too. However, a shorter term may mean higher payments since you’re condensing the amount of time you have to pay back the loan.

Before switching to a shorter term, take some time to decide if it’s more important to save money on your monthly payments or over the life of your loan. Review your monthly budget to see what it might look like with a new home loan payment. If you need help with your budget, remember that our team is here to help you.

Can you lower your interest rate?

If your credit score has changed since you got your original mortgage, you may benefit from refinancing. With a lower interest rate, you could save money on your monthly payments and save even more over the life of your loan. If you can decrease your interest rate by at least 1%, you may want to consider refinancing.

How long are you planning to stay in your home?

You want to make sure that the cost of refinancing is worth it, as you’ll have to pay closing costs on your new loan. Closing costs can include fees for taxes, title work, insurance, an appraisal, and more. Talk to our partners at Mortgage Center to learn more about how much the closing costs on your refinance might be. 

It's also a good idea to use a refinance calculator1 to figure out where the breakeven point is on your closing costs. If you plan to move before the breakeven point, refinancing might not be worth the cost right now.

Ready to get started?

If you think refinancing your home might be a smart financial move for your situation, apply for your refinance today with our friends at Mortgage Center1. We’re excited to help you on the next phase of your financial journey.

SEE ALSO: How To Create (And Keep) A Budget  |  4 Budgeting Ideas To Figure Out How Much Home You Can Afford

 

1Third party website. Lake Trust Credit Union is not responsible for the content, availability, security or compliance of any linked third-party websites. In addition, the site's privacy policies may differ from those of Lake Trust.

 

2$99 origination fee is available when you apply for a mortgage or refinance with Mortgage Center from January 1, 2022 through June 30, 2022 and saves you $981 off the current administration and underwriting fees of $1,080 on your closed home loan.


3$99 fee is available for a limited time. Mortgage amount must be between $40,000 and $647,200 to be eligible. Mortgage rates current as of 12/2/2021 and assumes a 30-year fixed-rate purchase or refinance of a detached, owner-occupied property with a loan to value ratio of 80% and a credit score of 740. A loan amount of $200,000 at an interest rate of 3% and an APR of 3.081% has a payment of $843.21 with 0.75 point due at closing. The payment does not include property taxes or insurances, the actual payment will be higher. Borrowers are responsible for any third-party costs including but not limited to: title, tax certificate, and appraisal. Offer applies to Residential First Mortgages financed with Mortgage Center and excludes Home Equity Loans and Lines of Credit. This offer can only be used once in a 24-month time period. Offer may not be combined with any other promotion or discount. The promotion has no cash value. This offer is non-transferrable. Terms are subject to credit and mortgage approval. Other restrictions may apply.

4Apply for a mortgage or refinance with Mortgage Center from January 1, 2022 through June 30, 2022, and $99 will be donated after closing to a non-profit organization focused on housing and shelter through our partnership with the Lake Trust Foundation.

 

Mortgage Center NMLS# 282701.

 

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