Chasing the Refi . . .

So you keep hearing that interest rates are low. You're probably asking yourself if it's time to refinance. Well, that depends. Here are a few things to consider:

• Are you currently paying mortgage insurance and will that go away because you have enough equity in your house? If you are able to get rid of the mortgage insurance premium you could actually take that extra payment and put it towards your principal, paying your mortgage down quicker.


• Your payment right now is so high it's painful to make the payment and refinancing would make the payment more manageable.


• Do you have equity in your house? If not, you may be faced with having to refinance into a a FHA loan and that means you will have mortgage insurance.


• Your payment may go down but you may be paying longer. For example, you are 5 years into your 30 year mortgage, you refinance and now the clock starts over because you refinance into a new 30 year mortgage. One way to combat that is to get a 25 year, or even 20 year mortgage.


• What is the cost to refinance? For example, if it costs you $8,000 to refinance and it will lower your payment by $150 a month- how long will it take you for you to recoup the savings? Take $8000 and divide by $150 that would mean it would take you 53 months or 4.5 years to recover that $8000. So unless you're planning on staying in your house for at least 5 or more years you might want to reconsider whether it's worth refinancing. One way to combat the cost is to take your current money being held by your lender for your insurance and taxes (called escrow) and your payment you get to miss the month after you refinance and put that towards your refinance costs. That could cut the costs of the refinance in half, thereby giving you a short time line to recoup the costs of refinancing.

Remember this is all very general, there are a lot variables and more things to consider that aren't discussed. So before you decide to chase the refi craze, run the numbers and make sure they work. You may just decide you're better off right now without refinancing.

For more real estate information be sure and check out http://www.elkesellshomes.com/ or call 301-865-9561

Calling First Time Homebuyers!!

Hi, my name is Elke Thornton-Husch and I’m a REALTOR with RE/MAX 100. Frederick.com has asked me to post an article every other week to keep you, the reader, posted on the real estate market. My goal is to provide you with information to keep you abreast of the market and give you the information you need when buying and selling a home. I would love to get questions from you the reader that I can post. Feel free to send me your questions or a topic you would like discussed to Elke@ElkeSellsHomes.com

Calling first time homebuyers (or not)! Hurry, Hurry-expires December 1, 2009
I’m sure at this point you’ve heard lots about the first time homebuyer tax credit, but what does it mean for you? Contrary to the title ‘First time Homebuyer’ you don’t necessarily need to be a first time homebuyer (check with your accountant to verify). The IRS describes first time homebuyers as someone who hasn’t owned a principal residence in the previous three years prior to purchasing a home.
The tax credit can be as much as $8,000! Here’s how it works. Buyers can take a tax credit (not a deduction) equal to 10 percent of the purchase-up to a maximum of $8000 off of their 2009 income taxes when filed next year. For example buy a house that’s $80,000 or more and you owe $8000 in taxes, you now would owe $0! Here’s the downfall-if you make $75,000 or more single, or $150,000 married filing jointly the tax credit maybe reduced. For more info go to http://www.federalhousingtaxcredit.com/2009/faq.php