Refinancing a mortgage can be extremely beneficial for homeowners who wish to lower their monthly payments and the total amount they pay in mortgage interest rates. But like most good things, refinancing comes with costs. If you live in New Jersey and are looking to refinance a jumbo mortgage loan, make sure you are aware of your risks, costs and benefits. If the costs do not outweigh the benefits, or if the risk is too great, you should seriously reconsider if refinancing is your best option.
Jumbo Mortgage Loans Borrower Risks and Benefits
Jumbo loans are used to pay for luxury homes and these homes are harder to resell at full price than other conventional homes. New Jersey jumbo mortgage interest rates are higher than conventional loans because of risk. The potential for higher financial loss is great for a borrower if they need to sell a home paid for by a jumbo mortgage.
Equity is hard to build depending on the size of the loan, market flux and amount the owner has paid off on the loan. Because luxury prices are more vulnerable to market flux, the potential to be upside-down on a mortgage is high if the borrower needs to sell their home in a down economy.
On the plus side, if you can get lower mortgage interest rates by refinancing, you may benefit substantially if you plan on staying in your home long enough to recuperate the amount it costs you to refinance.
How Long will it take to Recuperate Refinancing Costs?
Refinancing a mortgage comes with associated fees. To figure out if your costs to refinance are worth it, simply divide your closing costs by the amount you would save each month to find out how long it would take you to recuperate the costs of refinancing. For example, if your closing costs are $10,000 dollars and your monthly payment is lowered by $200, it would take you 50 months (10,000 ÷ 200 = 50) to recuperate costs. If you plan on staying in your home that long or longer, refinancing may be beneficial.
Save Yourself Money with Knowledge
Bottom line, the best way to get the lowest mortgage interest rates available in New Jersey is to learn everything you possibly can regarding refinancing. RefiAdvisor offers FREE videos to help homeowners avoid junk fees and scams during their next refinance. The videos will teach you how to avoid overpaying one cent in unnecessary costs and will take you step-by-step through the mortgage refinancing process. To save hundreds of dollars on your monthly payments guaranteed, sign up for RefiAdvisor’s FREE six-part video series today!
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