Honolulu mortgage rates for owner occupants have been near 4.5% for over a month. Perhaps you were thinking of refinancing. Perhaps not. I’ve spoken with several friends and clients and many were not aware that rates were this low. I blame the hyper-negative media for masking this once in a lifetime opportunity.
Before you get too excited, look at the big picture to see if refinancing really makes financial sense. Below are some ways to help you decide if it will benefit you or not.**
Do you plan to pay off your mortgage in the next few years? If so, it makes no sense to refinance, as you will not be able to recover the closing costs. This also applies if you are planning to sell your home in the next few years.
If you currently have an Adjustable Rate Mortgage, moving to a 30-year fixed rate mortgage is a viable option. Refinancing may not lower your monthly payments that much, but you’ll probably sleep better knowing your payments won’t go up over the life of the loan.
If your current mortgage rate is very high and you qualify for a loan under today’s stricter guidelines, it makes sense to refinance. A good rule of thumb: within two to three years, you should save an amount equal to the new loan closing costs.
Finally, don’t forget that as you pay less interest over time, you will probably pay more taxes.
**Refinancing isn’t all that complicated. Nevertheless, please consult your mortgage professional to be sure you’re on the right track. Contact Michael Zimmerman if you need a referral to a great mortgage lender.
