Honest to Goodness - About Refinancing

Thinking about refinancing?

There’s still time

Mortgage rates sizzled this past summer, reaching their lowest levels in years. If you didn’t take the opportunity to refinance your mortgage, don’t worry; now’s still a great time. To tell us more about refinancing and why it may make sense for you, we spoke with our resident home lending expert, Avidia loan officer Andy Nawrocki.

Real Smarts: Andy, why is refinancing a good idea for some borrowers?

Andy:  People refinance for a variety of reasons. One of the most common reasons is to lower their monthly payments. Another reason is to shorten the term of a mortgage. For example, you could potentially refinance a 30-year mortgage to a 20-year mortgage without increasing your monthly payments. In doing so, you’ll save thousands of dollars in interest during the life of your loan.

Refinancing also provides an opportunity for homeowners to get the cash they need to consolidate debt or make home improvements. We also have seen people refinance their adjustable-rate mortgages to fixed-rate mortgages, which gives them the peace of mind of having a predictable monthly payment.

Real Smarts: How do you know if refinancing makes senses for you?

Andy: There are different theories about this, but I believe it really comes down to the homeowner’s individual financial situation – and what they’re looking to accomplish. For example, if someone has high-interest debt that they want to consolidate, refinancing to get cash out may be a good choice even if the new interest rate isn’t that much lower than their current rate.

Real Smarts: How have housing values impacted refinancing?

Andy: Home values have increased.  That means, homeowners have more equity and thereby can refinance to get cash out to pay off student loans or credit card debt, make home improvements, or fund other expenses.

Real Smarts: Why do you think some people are reluctant to refinance?

Andy:  I think people are just used to their monthly payments and may not realize how much they may be able to save. They may not realize that even a ½ % rate reduction can make a big difference in their budget. Another reason may be the closing costs that are associated with refinancing.

Real Smarts: Is it expensive to refinance?
Andy: In general, it can cost between $2000 - $3000 with closing costs (credit reports, appraisal, and title searches) as well as prepaid items for escrow (homeowner’s insurance and property taxes). Borrowers do, however, have the option to roll those costs into the loan so they don’t have to pay out of pocket. Of course, if they want to pay those costs outright, they can.

Real Smarts: Who can homeowners talk to about refinancing with Avidia?

Andy: They can talk to me. I can help them review their current mortgage and financial goals and determine if refinancing can help them realize their goals. I can be reached at 978.567.3652 or email at a.nawrocki@avidiabank.com. They can also apply online at www.avidiabank.com/andrew. NMLS#1526357