Mortgage and your money

Posted: March 4th, 2016 | Columnists, Featured, Financial News | No Comments

Three things to consider before you refinance

By Taylor Schulte | Finance News

The decision to purchase a home is often life-changing, with a mortgage becoming a big part of one’s financial plan and often the biggest piece of debt. And, similar to the stock market, the economic landscape for lending is continuously changing, making it imperative for consumers to review their mortgage regularly.

Taylor Schulte

Taylor Schulte

With interest rates remaining at historical lows, many are considering refinancing their home to lower monthly expenses and assist with a long-term payoff or consolidate debt — essentially to put themselves in a better financial position.

Yet, reasons to refinance are not limited to interest rates alone and the “right” time may vary for each consumer.

To hone in on key refinancing considerations, we chatted with Vince Giacalone, mortgage banker with Residential Wholesale Mortgage (RWMI). Below is our collective list of motivators and considerations for a refinance.

What’s your end goal?

Before jumping into a refinance, determine your plan for the home, i.e., what is the estimated time you plan on owning the home? Is it two years? Is it 20?

Determining that time frame will help dictate the appropriate loan program and help choose either a short term or long term hold strategy. As Giacalone put it, “Friends don’t let friends pay points.” In other words, paying points to obtain a mortgage only benefits the consumer in specific, long-term scenarios. So, have a good understanding of your timeline before you refinance.

Know your motivators.

What is your specific reason for refinancing? Is it to obtain the lowest possible rate, to protect the loan over the long haul or to improve your monthly cash flow? Or, are you considering home improvement? It’s important to determine the motivation prior to making the move.

In a low-interest environment, some consumers may see immediate monthly savings, and as a result, opt to refinance for that reason. Others may use a cash out refinance to build an addition to the house, consolidate their debt, or invest the money elsewhere.

Interest rates. Interest rates aren’t the basis for a refinancing decision, but they can certainly play an important role. With current interest rates at historic lows, consumers may be taking a closer look at their statements and assessing where they stand. “Taking the mortgage temperature can either show consumers they are well positioned or serve as a wakeup call,” advised Giacalone. As each scenario is specific to the person, the refinancing decision should be made based on all aspects of the interest rate environment.

Similar to the decision-making process involved in the original purchase, it’s important to review one’s reasons for refinancing and whether it’s the right time. Personal situations vary, so be cognizant of your motivators and goals before refinancing your home.

—Taylor Schulte, CFP is the founder of Define Financial in Downtown San Diego. Schulte specializes in providing independent, objective, financial advice to individuals, families and businesses. He can be reached at 619-577-4002 or

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