Pennsylvania Refinance Loans Does the 2 Percent Refinance Rule Apply to You?

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Pennsylvania Refinance Loans Does the 2 Percent Refinance Rule Apply to You?
(presented by www.refinance-refinance.net - mortgage lenders)

By J. Hale

There is an old rule in the lending industry that says you should never refinance your mortgage unless you can get a rate that is 2 percent less than your current mortgage rate. If you are thinking about getting a Pennsylvania refinance loan and wonder whether or not the 2 percent rule applies to you, the answer is NO. The decision to get a Pennsylvania refinance loan should be based on a number of things including, the closing costs on the new loan, the amount of time you plan to stay in the house, the new rate you will be paying, and whether or not you plan to get cash back at closing.

Closing Costs

If you want to get a Pennsylvania refinance loan, you will be required to pay closing costs. Currently, closing costs in Pennsylvania average $3,175. Even if you are rolling the closing costs into your loan, you will still need to decide if paying to get a loan that you technically already have is worth the price.

Staying in the Home

If you don’t plan on staying in the house for at least two years, refinancing probably isn’t smart move. Unless you are going to see significant monthly savings, it won’t be enough to cover the entire cost of the loan.

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Interest Rate

Barring special circumstances, it is almost never a good idea to refinance if it means paying a higher rate. Currently interest rates on 30-year Pennsylvania refinance loans average 5.76 percent. If your current rate is a lot less than that, you may want to reconsider your refinance plans.

Cash-Out Refinancing

If you plan to get cash back on your Pennsylvania refinance loan, you will want to make sure that it is the most practical way to go. You can also borrow from your equity using a home equity loan or line of credit. These loans are very different from refinancing.

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This entry was posted on Wednesday, November 22nd, 2006 at 6:30 am and is filed under Refinance. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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