Refinancing Your Illinois Mortgage
Is It Time to Refinance Your Illinois Mortgage?
With mortgage interest rates in Illinois hovering at or near their historic lows, many homeowners have decided it’s a good time to refinance their existing Illinois home loans. And many more are considering it. But before you take the plunge, here is some information you should know to help you decide if it’s the right move for you.
Why Refinance with United Home Loans?
Homeowners refinance their mortgages for any number of reasons, but here are the reasons many of them cite.
-Interest rates are down to levels significantly below the original loan. And lower rates, of course, mean lower monthly payments.
-The homeowner’s credit rating has improved, meaning he or she may be eligible for a better interest rate.
-The homeowner wants to change the type of loan, say from 30 years to 15 years, or from a variable rate loan to a fixed rate loan.
-While less popular than it once was, some borrowers have enough equity in their home to take cash out to pay for home renovations.
When Not to Refinance Your Illinois Mortgage Loan
While interest rates are low, there are still some borrowers for whom refinancing is not a good idea.
-If you’ve had a loan for a long time, less of your monthly payment is going to interest than when you started. That means you are building equity. If you refinance, the loan starts over again, with most of your payment going to interest.
-Your current loan has a prepayment penalty. While rare, some home loans in Illinois do have them. Check your loan documents carefully before you start the refinancing process.
-You plan to move in a few years. Depending on the closing costs and the amount of your monthly savings, it can sometimes take between two and five years to recover your costs. If you are planning to buy a bigger home in two years, refinancing now may not be such a good idea.
What It Costs
Although your interest rate will certainly be lower, refinancing a mortgage does come at a cost. While United Home Loans offers special refinancing deals, especially to our current customers, the Federal Reserve Bank estimates that borrowers can pay between 3% and 6% of their loan amount in fees and other expenses when they refinance.
Here are some of the fees and expenses you may have to pay when you refinance you existing Illinois Mortgage Loan. Fees vary by state, so check with a local lender for the exact cost of refinancing.
-Points (Each point is 1% of the loan amount).
-Underwriting and other bank fees.
When they refinance, borrowers generally don’t need to be represented by an attorney, which is the case in many states when buying a home.
Get a free mortgage refinance quote from United Home Loans today!