Nicole Donn: On refinancing your home

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By Nicole Donn

A very important part of your life which can also be part of your overall financial plan is your housing. One of our most basic needs is shelter and if your shelter can also provide you with financial security, so much the better!

This is part of a series of articles we are presenting to help you understand the process and details of the financial aspect of homeownership. 

When and why should I refinance? 

Many of you have heard there is a mini refinance boom going on due to low rates and high property values, but is refinancing right for you?

Just because the interest rate you have is higher than what you can get doesn’t always mean it’s the right time to refinance. The cost of the refinance and the amount of time left on your current loan determine if refinancing makes financial sense.  Sometimes lowering your monthly payment by a few hundred dollars a month can cost you tens of thousands of dollars in the long run by stretching out the repayment term of the loan. 

Refinancing may be the right call, however, for some homeowners feeling financially strapped by monthly mortgage payments and other debt such as credit cards, car loans and student debt. With rising housing prices boosting home equities, refinancing can help save homeowners tens of thousands of dollars, which could create a situation in which they no longer have to live from paycheck to paycheck.

As the manager of US Financial Mortgage Lending, I always put myself in my client’s financial shoes and advise them to do what I would do if I were in their position by looking at the whole financial picture.

Recently, a couple who owned the house they live in, a rental house and a rental condo, was referred to me by their realtor after having been turned down by one of the big banks due to having a high debt to income ratio, as they wanted to refinance their rental condo.  I took a look at their paperwork, agreed that what they were asking for was not likely to get approved, and showed them how they could refinance the rental house instead, pull out enough to pay off the condo, save several hundred dollars a month and pay off the loan in 15 years instead of the 22 years they had left on the old loans. It resulted in savings of approximately $70,000 and a free and clear condo.  This is just one example of how refinancing can turn your financial life around. 

Call 510-758-3035 or email ndonn@gemcorp.com to see if refinancing makes sense for you.

Nicole Donn is the manager at US Financial Mortgage Lending, 4973 Appian Way

in El Sobrante.

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