With rates dipping to historic lows we get this question a lot. Should homeowners refinance their existing home versus sell and purchase a new home?
We can make a compelling argument for both. The best answer depends on your situation. Odds are, you should probably do something. If you are happy in your home, it meets your needs, and you plan on being there awhile you might consider refinancing.
If you have outgrown your home, or your home is too much work for you, you might consider a sale. Inventory is low right now, so it is a great time to sell. Not only will you be selling in a seller’s market, you will also be financing your next home into one of the lowest interest rate environments we have ever seen. Of course, inventory is low, so we must make sure you have a home to go to.
Refinance Existing Home Versus Sell and Purchase
Let us throw out a possible scenario. A homeowner owes about $274,000 on a 1st mortgage and about $243,000 on a line of credit. Total debt is about $517,000. Conventional loan limits are set at $510,000, so if this homeowner wants to refinance it’d be best to pay down $7,000 to get down to the $510,000 limit, otherwise it would be a jumbo loan and priced differently.
The principal and interest payment currently is $2,756. A new loan at 2.75% would have P&I payment of $2,082. That is a monthly savings of $674. Most of that is due to the lower rate. $28.58 of that is due to paying down $7,000 to get to the conventional loan limit.
This homeowner now has a decision to make. They can refinance at 2.75% and save $674/mo., or they can sell and purchase another home that suits their needs better at 2.75%. The key here is the low rate. This homeowner should probably do something. The question is, what is best for that family?
Time to Talk
This is where we come in. We have several mortgage lenders we work with. We can look at your situation, see how much we can sell your home for and how much would end up in your pocket at closing. The next step is determining where you would go. It might be local, or you might consider moving to a different area. We have an app that can show you homes anywhere in the country, and of course being part of the nation’s largest and most successful real estate company allows us to put you in touch with a great agent anywhere in the world.
If you are living in a home that does not quite meet your needs, perhaps it is time to start exploring. Some people decide a move is not worth it. Others decide they feel like they are settling and would like to make a change. Either way, the Ellis Team is here to consult with you. Personally, we do not care if you decide to sell today or 5 years from now. We are here for you whenever that day comes. We are interested in helping you make the best possible decision for your family.
If you are a little curious as to what your home value is, you can call us at 239-489-4042 Ext 4. Ask for Sande or Brett Ellis. Or, you can find your home’s instantly for free on our website www.swflhomevalues.com
Making a move is not always an easy decision. There are numbers involved, memories, and just the hassle of moving. Our team has resources for you to help make your decision easier. We are not here to tell you what you should do, but rather counsel you and present you with your options.
We look forward to speaking with you and helping you decide which way is the best for your family.
Good luck and stay safe!
See Last Week’s Article “Price at Market Value and Buyers Will Come”