October is National Credit Union month, and on the radio I have heard a lot of refinancing mortgage and loans promotions going on by local credit unions. My husband and I bought a new home and sold our old one a year ago, leaving us with a higher interest rate on our new mortgage. I am considering looking into refinancing our mortgage, perhaps with a credit union because I have heard that their interest rates are lower than the big banks. Has anyone ever refinanced their mortgage before? What are some things you considered before doing so? Is spending the time to refinance going to save us any money?
It really depends. First, check the current market trend and see if it's moving in favor of homeowners. If it seems like homeowners are receiving the short of the end of the stick, then you may rethink your decision to refinance and wait until the market is in much better shape. Of course, any homeowner would want to lower the interest rate of their loans. Still, it pays to tread carefully.
Our house was mortgaged to my husband's bank when we bought it. After some years, my employer (also a commercial bank) appeared to have a lower interest rate because of the employee's benefit. The difference of 2% interest rate is substantial so I transferred the mortgage of our house to my bank. Now I have only 1 year to pay off the mortgage.
When deciding whether or not to refinance an existing mortgage, you have to consider some other factors besides the lower interest rates being offered by credit unions. One is the incidental cost of having the mortgage refinanced. Over here, you'll have to pay for property assessment, expenses for annotation, and other expenses required to effect the transfer of mortgage. You may also have to pay some fees to the original creditor bank. You have to determine what the penalties or charges are, if any, for pre-termination. Then there's the investment of time and effort. These factors may easily cancel any savings you may generate from refinancing.
I think this is a very peculiar situation for each case. Each person may have a specific problem and it is only up to them to see whether or not it is worth investing in it to solve. It's clear that refinancing is an option but I think it should only be used as a last option.
