Should I Refinance?

When considering whether or not to refinance, it's important to take a few things into consideration. Arrowhead Title is the best title agency at the Lake of the Ozarks, so we are very familiar with many types of real estate transactions and we have some tips for you today! If you are thinking about refinancing, keep reading and learn what you should consider before making the leap. (Also be sure to consult your financial advisor before making any major financial decisions.)

Percent Difference

It can be tempting to refinance your home when you see mortgage rates falling. But, it can be hard to know if they are low enough to truly make a difference and make the refinance worth the time and effort. If you have a mortgage rate of a hypothetical 5.0% and the current market is showing 4.9%, then a refinance would not be worth it. With just 0.1 percent of a difference, you likely will not recoup the new closing costs and financing fees. A good policy is to aim for at least a 0.5% decrease

Length of Time

If you have lived in and made payments on your home for 20 years, then it may not make sense to refinance with a 30-year mortgage. It's a good idea to try and keep the added length of time below 5 additional years. So in the case of the 20-year payer, a 15-year mortgage could make sense, as it would only add 5 years to the amount of time they will be paying on the house. An even better scenario would be if you could take time off the length of your loan!

Recovering Fees

Unfortunately, even though you've already purchased the home, there will still be closing costs and financing fees in most refinancing scenarios. Your new super low interest rate may not be worth it if you are paying exorbitantly high closing costs. In order to calculate whether or not this aspect will work in your favor, take the closing costs and divide them by the amount you will save on your mortgage payment every month. This will equal how many months it takes to recuperate the costs of closing. If this amount of time is longer than 5 years, refinancing may not be such a good idea. 

Escrow Services at the Lake

Arrowhead Title has the best escrow services at the Lake of the Ozarks. If you are considering refinancing and have questions about your escrow, give us a call. We have been part of the Lake of the Ozarks community for many years, and we would love to help you!

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750 Bagnell Dam Blvd Suite B
Lake Ozark, MO 65049


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