Is It A Good Time To Refinance?

It seems like everyday there's new information about how low mortgage rates are, which leaves consumers wondering if they should, or are able to, refinance.

The non-profit Illinois Association of Mortgage Professionals, established in 1987, offers the following recommendations and input as it relates to refinancing:

• How long do you plan to live in the home? It's recommended that you compare the cost of the refinance to the monthly savings and determine how long it will take to make your money back. For example, if the refinance costs $2,000, and your savings will be $100 a month, in just 20 months, you'll recoup your initial investment.

• What will you do with the monthly savings? While most people are looking to cut back wherever possible in today's economy, in this case, it makes sense to think about good ways to use that extra monthly income, such as to build up your savings account, pay down credit card debt, or increase contributions to a retirement fund. What seems like a relatively small sum of money really adds up over time.

• It is advisable to shop and compare rates/programs among two or three different mortgage originators. Refinancing should be viewed the same as any other major purchase and it's a good idea to compare rates, costs, and programs with an independent mortgage broker or banker, as well as your own bank.

• Does it make sense to wait and see if rates will go lower? This is kind of like waiting to see what the weather will do next weekend. Nobody can predict the future of rates with 100% certainty; however, they are at or near historical lows for many loan programs, and even if they go down a bit, you have to consider whether you want to wait for that, yet also risk a rate increase.

• What if you have already refinanced in the past couple of years? In recent months, rates have dropped to an even lower level than just a couple of years ago. The bottom line is that it doesn't hurt to speak with a trusted mortgage professional, who will run the numbers and discuss with you whether another refinance makes sense.

• Consider working with a member of a state and/or national trade association. These individuals are required to comply with a strict code of ethics and maintain continuing education requirements.

The Illinois Association of Mortgage Professionals continues to fight for consumers' access to credit at the state and national level and a list of mortgage originators is available on their web site at www.iamp.biz.