With Improved Credit, What About Florida Home Mortgage Refinancing?
If you’re stuck with an adjustable rate loan whose rate is set to sky-rocket shortly, the question may not be IF you should consider Florida mortgage refinancing, but rather WHEN this should take place.
For example, Don Taylor is a CPA. He recently recceived a question from an individual with an initial bad credit score. Despite the poor rating, this owner was able to refinance his Florida home loan from a 10 percent mortgage to a 7.125 percent loan on a $208,000 loan balance.
Now, the credit score has improved and refinancing to a 6.375 percent loan is on the table. However, it would cost the owner another $4,000 in closing costs. The important question, therefore, remains:
Is it worth it?
Taylor responds: The decision to refinance a Florida home mortgage depends in large part on how long you plan on being in the house. Estimate how long you have to remain in your residence to break even on closing costs in a scenario such as this by dividing the closing cost by the difference in monthly mortgage payments.
Under the conditions given above, one would need to be in the house for 3ΒΌ years in order to break even in such a manner.
If you plan on living there for three to five years, a Florida home loan refinance at this lowered rate is a difficult decision.
The money the individual above spent on the last refinancing doesn’t play any role in whether it makes sense to refinance now. It’s what economists call a “sunk cost.” Because those funds are spent, you can’t make them UNspent. You may, however, be able to use the fact that you recently refinanced to reduce the closing costs on the new Florida mortgage.
Speak with our brokers to learn more. They’ll lay out every scenario is clear detail to make the decision as straightforward as it can be.
