When it comes to refinancing a loan, most borrowers get hung up into asking “what is your rate”.  There is an old adage that if you can reduce your rate by 1% that it makes sense to refinance.  This is NOT always the best indicator for when to begin the refinancing of your home.

One of my past customers was concerned about his family’s cash flow of debt, but reasoned that since they already had a low rate, why should they refinance? As their “Trusted Advisor”, I asked about goals, when they wanted to retire, what funds they wanted to have available at the time of retirement and what would they be willing to do to meet those needs.

You can click the link here to see the money management solution I created for them, but know that every person has a different reason, different goals for refinancing their home.
One of the big obstacles today, as a result of the Sub Prime debacle and high rate of foreclosures we are seeing in today’s market, is Fannie Mae and Freddie Mac’s desire to credit base interest rates.  This means that as of March of 2008, all Conventional loans are being evaluated on FICO scores. 

The object, while simple, is not an exact science.  The higher the FICO or credit score, the better the interest rate for the loan.  However, when refinancing, there could be a significant jump in interest rates when following the Conventional Price Adjustment for refinance loans.  More importantly, a cash out loan, which is consider a more ‘risky’ loan, then another set of guidelines for setting loan interest rates is in affect.

Allow me to ask a few thought provoking questions about your future goals and let me find the best option for you.  Please contact me by email at jyarrington@bankingunusual.com