The question of whether or not to refinance your San Diego VA loan can be a difficult one. Many factors should be taken into account. Refinancing can lower monthly payments with a lower interest rate, or by changing an adjustable rate to a fixed rate. Whatever the motivation for refinancing, pros and cons should be carefully weighed.
The Potential Benefits of a VA Loan Refinance
If your VA loan is currently an Adjustable Rate Mortgage(ARM), you’ve probably noticed that the interest rate tends to go up rather than down. The higher up it goes, the greater your monthly payment. Homeowners with adjustable rate mortgages usually find themselves paying a higher interest than current fixed rates. If this is the case, refinancing into a fixed rate can be of great benefit.
Another common reason for refinancing is to combine combine a first and second mortgage into a single mortgage. Refinancing into a single mortgage can help you consolidate monthly payments. You end up paying less interest overall and simplifying the payment process.
Regardless of the type of mortgage, it’s usually worth it to refinance if the resulting interest rate is at least a point lower than your current rate. If it is less than a point lower, the cost of refinancing may be too high for it to be worthwhile. With a lower monthly payment, you may want to pay more than the minimum to pay off the mortgage more quickly.
Potential Disadvantages of Refinancing
There are always fees associated with refinancing. Their amount should be taken into careful consideration. While in some cases you can roll those fees into a new loan, it is also possible you may have to pay out of pocket. We can help you evaluate how your monthly payment will be affected. If the effect on monthly payments is negligible, refinancing may not be the right decision.
Another factor to consider is if you plan to stay in the home long-term. If you foresee a move in the near future, refinancing may not be such a great option. You may not have enough time to recoup your savings.
Furthermore, refinancing may add more years to length of your mortgage. If you’ve been paying your current mortgage for ten years and refinance into a new thirty year mortgage, you’ll end up paying your mortgage over a forty year span.
Many people refinance in order to cash out on home equity. This is usually a very risky move. If home values drop, you will end up owing more for your house than it’s worth. It become an even bigger problem if you sell your home, in which case you’ll still owe money to the lender.
We Can Help You Evaluate All the Costs and Benefits of Refinancing
We at VA Home Buyers Center have decades of experience helping veterans evaluate pros and cons of refinancing. Let us guide you through the process by carefully evaluating all the potential benefits and detriments of a home refinance. In many cases, refinancing your VA loan in San Diego can be a smart decision. You can reach us seven days a week via email at firstname.lastname@example.org or by calling Dan Cauffiel at (619) 261-9954.