Expert Q&A

How do I know which option to pick when refinancing?

I’ve received three different scenarios from a lender and I don’t know how to evaluate them to see which one is best for me. Do you have any tips or websites that would be helpful?

Related Topics: Debt and Credit
Related Tags: Refinance
Justin R. Poore
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By Justin R. Poore - JP Advising w/ Sammons Securities
Answered over 4 years ago

Typically you will want to go with a fixed rate in this environment regardless of the value of any ARM options based on interest rate. you will also want to weigh the value of the points you may pay when refinancing and how long it will take for you to pay that money back to the loan, and how much interest the reduction in interest rate will save over the life of the loan.

Just because an interest rate is low, doesn’t mean it costs the same – hence it is best to determine the cost to re-finance, the over all interest savings on the proposed loan over its lifetime, and how long it will take to “recoup” that cost.

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