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Is a Mortgage Refinance Right for You?

Mortgages Refinancing

Is a Mortgage Refinance Right for You?

Save yourself the regret of buying too early with these basic steps.

Achieve Homebuying Success

There are few purchases in life that carry the financial and psychological weight of buying a home. Whether you are buying your first home, moving up to your dream home, or downsizing your home after the kids have left, it is important to understand the ground rules for success.

Get financing before you get a home

There are few things in life as disappointing as losing out on the home of your dreams because you can't secure funding. While the desire to get out there and search for that great home is understandable, it's vital to line up the financing you will need before you start shopping for a home.

Choose the mortgage that works best for you

It is also important to take a good look at the various types of mortgages on the market before getting started in the home-buying process. Mortgages come in more choices than the typical 15 or 30-year standards. For that reason, potential homebuyers need to understand how each type of mortgage works in order to gauge which is the best choice for their needs.

Look at the community, not just the home

Buying a house in the wrong area can be a big mistake; it's important to choose the location as well as the home. Potential buyers can learn a great deal about the nature of the various neighborhoods by driving around and by talking to other residents.

Be fair with your first offer

Refinancing your mortgage means taking out a new loan on your home, which replaces your old mortgage with a new one. To determine if a mortgage refinance is the right move, you must calculate to see if such a move will save you money. Typically, the goals of a refinance are to alter the repayment method or extend the term length. It is best to consider a refinance if you plan on staying in the home and do not anticipate the need to re-mortgage over the next few years. Every situation is different – so it's important to know where you stand with your current mortgage in paying off the principal.

Refinancing Considerations

Obtaining lower interest rates

Will your new loan offer a lower interest rate? If so, you could save more toward paying off the principal, and therefore pay off the loan quicker. An online loan calculator can help you determine how much you stand to save each month with a lower rate. The interest rate doesn't have to drop dramatically to offer sizable savings.

Switching to a hybrid rate mortgage

If you currently have an adjustable rate mortgage (ARM), you may want to review your adjustment date and consider one with an extended fixed initial period, such as five, seven or ten years. This product locks your rate for that initial period and could reduce the amount you are paying in interest over time. Because this type of loan is rarely sold in the secondary market, it could save you thousands in the long run, while allowing your loan to remain with the same community lender you know and trust.

Cost of refinancing

Mortgage refinance is not a cost-free process. There are closing costs associated with the transaction and should be accounted for when calculating your projected savings from the refinance. A refinance should always be done to save you money, whether in the long or short term.

For a thorough cost-benefit analysis of a mortgage refinance, visit your local North Country Savings Bank. 

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