When Should You Consider Refinancing?

Owning a home at the Lake of the Ozarks is a never-ending journey. As the owner of your home, you are responsible for any required repairs, desired upgrades, and standard maintenance. As the costs of homeownership begin to stack up, many homeowners realize that budgeting and saving money wherever possible becomes essential. One potential way for homeowners to save money is through refinancing their mortgages. You will have to work with a mortgage lender to be sure you fully understand the process, but your real estate agent in Lake Ozark MO is here to help you get acquainted with the basics.

What Does "Refinancing" Mean?

Unless you are in the small percentage of cash buyers, you will probably take out a mortgage loan to buy a house at the Lake of the Ozarks. If and when you choose to refinance, you will essentially be taking out a new mortgage loan to pay off your old one. Your monthly payments will then go towards paying off your new loan.

Is Refinancing A Good Idea?

In order to determine whether or not refinancing is right for you, you must consider several different factors. Here are a few things to consider:

Your Interest Rate vs The Current Market Rates
Most mortgage loans offer a fixed interest rate for either the duration or a portion of the loan. If you purchased your home several years ago, it's very possible that interest rates will have dropped since you purchased - possibly significantly. If interest rates have dropped considerably since you bought, refinancing could help you save a lot of money.

How Much Equity You Have In Your Home
If you do not have at least 20% equity in your home when you refinance, you may be required to pay the additional cost of PMI (Private Mortgage Insurance). While some loan options advertise the possibility of putting 0% down, it may be hard to secure these types of loans when you refinance. The purpose of refinancing is to help you save money, so you'll want to make sure you aren't signing up for extra costs.

Your Credit Score
Any time you apply for a new loan, your lender will review your credit report to determine how dependable you are as a borrower. If your credit score has dropped since you purchased your home, you may not be able to secure as good of an interest rate when you refinance (even if current market rates have gone down). Before choosing to refinance, review a copy of your credit report to see if you are in a position to do so.

How Long You Plan To Stay In Your Home
Refinancing can be a great way to save money long-term, but it is not necessarily a cheap process. You will still be required to pay for closing costs and other fees associated with a new mortgage loan (generally adding up to 3-6% of the loan amount). In other words, you will have to spend money to save money. If you plan to be in your home for several more years, the long-term savings will likely outweigh the initial expense. If you only plan to be in your home for a short while, however, it may not be worth it.

How Do You Go About Refinancing?

In order to refinance, you will have to work with a mortgage lender. Your lender will be able to help you evaluate your financial situation, evaluate the pros and cons, and ultimately determine whether or not the process is right for you.

In Need Of A New Home? I Can Help!
Refinancing only makes sense if you plan to stay in your current home for many more years. If your family or financial situation has changed and you are considering looking for a new home at the Lake of the Ozarks, I would love to help you. I can search all of the homes for sale at the Lake of the Ozarks to help direct you to the properties that will best suit your needs.

For more information about my resources for homebuyers at the Lake of the Ozarks, visit my website. I look forward to working with you!

Susan Spica
Professional REALTOR®

BerkShire Hathaway HomeServices
101 Crossings West, Ste. 202
Lake Ozark, MO 65049

Office: (573) 365-6868


Susan's Cell: (573) 280-0484