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Should You Refinance Your Home?

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Today’s rates are still at historic lows, which means now could be the right time to refinance your current home loan. But the word to focus on there is “could.”

Refinancing isn’t right for everyone, but if it is right for you, it could save you hundreds every month and thousands over the life of your loan. When considering whether or not to refinance, first look at interest rates.

Do Some Rate and Fee Shopping
Take a look at the rates out there and compare them to your current rate and term. If you haven’t refinanced in the last 5-10 years, chances are today’s rates are a point lower – maybe more.

Lowering your rate by a point or two can save you hundreds every month. For example, if you were able to save $200 per month, those savings could add up to $72,000 over a 30-year period. But the rate isn’t the only factor.

Calculate the Fees
Always do the math and add up the appraisal fee, origination fee, attorney fee, and other lender fees. These can add up to thousands. Then, it’s a simple matter of using an online calculator to estimate your break-even point.

You’ll find the Refinance Break Even Point calculator at the St. Helens Community Credit Union website. Simply enter your mortgage basics and the total fees you could pay when refinancing. You’ll see an estimated monthly payment for a 10-, 20-, and 30-year loan as well as the number of months it would take to break even (pay off the fees) with your monthly savings. If your break-even point is less than 24 months, and if you do not plan to move within that time period, a refinance could be a good choice.

Choose the Right Loan and Term
Refinancing your home loan gives you the chance to extend your term for bigger monthly savings. But, with the right qualifications, you could keep your current monthly payment the same while lowering your term significantly. That means you could pay off your home loan sooner and save tens of thousands in interest payments.

Consider the Tax Implications
The interest you pay on your mortgage could be tax deductive. If you refinance and choose to take some cash with the loan, you could get an added tax benefit. Of course, everyone’s situation is different, so be sure to talk with your tax advisor about your options.

St. Helens Community Credit Union can help refinance your home loan. Choose from 15- and 30-year fixed rate loans, including affordable payments, personal assistance, as well as FHA and VA financing. Stop by any branch, call 503.397.2376, or visit us online at shcu.org.