With the low interest rates today, you may be considering a refinance. Before you begin, be sure to do your homework.
Today, we are seeing some of the lowest interest rates in decades and that may have you contemplating a refinance. After all, isn't it a great time to refinance so you can lower your monthly payments by shaving a percentage point or two off of your current interest rate? The answer is maybe.
While mortgage rates are at an all-time low, that's only part of the picture. If you're thinking about refinancing your existing mortgage, here are a few things you should keep in mind.
A lower interest rate is just the beginning.
Of course, you want to pay the lowest interest rate possible. But there are other things to consider when deciding if a refinance is right for you. Why do you want to refinance? Just to get a lower rate? Or, do you want to pay off your mortgage sooner? Maybe you just want a lower monthly payment. There are a number of reasons people refinance, but deciding what you want to accomplish with a refinance will help you decide if this is the best time to make the change.
Once you know what your goals are, visit our website and use the refinance tools to compare interest rates and terms for different kinds of mortgages. Just click on the 'explore your refinance options' link on our home page to find online tools that show how monthly payments can change based on the interest and the mortgage option you choose. For example, explore the differences between a fixed rate and adjustable rate mortgage. Fixed rate mortgages generally have higher rates than adjustable rate loans. And the longer the term, the higher the interest rate tends to be. You can even tell us the exact rate you want, and in just a few seconds, we'll start helping you find the best type of mortgage for you.
As important as the interest rate is, it's not the only thing you should be thinking about if you're considering a refinance.
The term of your mortgage matters too.
A lower interest rate may drop your monthly payment, but in order to achieve the lower payment you may also have to extend the term. That means paying on your mortgage longer. For example, if you are 5 years into a 30 year mortgage, instead of having just 25 more years to go you would be extending the term to 30 years. Another consideration is the cost of the refinance, because you will have to pay fees at closing.
Next, what are your long term plans for your current home? Your answer to this question brings us to the most important consideration of all...
How much longer will you call this house your home?
When deciding whether to refinance, you should consider how long you plan to stay in your home. If you're thinking about selling your home anytime soon it may not be the right time to refinance. Because refinancing is all about one simple idea: How long will it take you to break even? And then, how much will you save after you've broken even? That's when you really reap the savings from a refinance.
If you move before your break-even point, then refinancing probably doesn't make sense. Regardless of how attractive a lower interest rate and monthly payment may seem, if you sell your home before you recoup the expenses from the refinance then you haven't saved money - you've actually spent more.
Need help getting started?
If you're considering a refinance, whether you're a current Citi customer or not, we're here to help. Our mortgage team is available 24 hours a day; 7 days a week. You can reach us by phone to talk over your refinance options at 800-248-4638, or if you prefer to chat online, go to our website and click the 'Chat Now' icon. We can help you determine if refinancing is right for you.
© 2011 Citibank, N.A., equal housing lender, member FDIC. Citibank, Citi and Citi with Arc Design are service marks of Citigroup Inc.
© 2011 Citibank, N.A. This is not a commitment to lend. Terms and conditions of programs, products and services are subject to change. All loans are subject to credit and property approval. Certain restrictions may apply on all programs. Offer cannot be combined with any other mortgage offer. Citibank, N. A., equal housing lender, member FDIC. Citibank, Citi and Citi with Arc Design are service marks of Citigroup Inc.
Gee, this isn't much of a "blog" when the only answer to each question is "I passed along your inquiry to a manager..." I do have one or two questions however. Why do you charge a fee to set up bi-weekly mortgage payments? I mean you're getting your payment twice as often and from a newly opened citi checking account. also, shouldn't i be getting a "lower" interest rate for paying twice as fast? You don't offer anything except a shorter term which quite frankly ANY bank would do. this isn't anything special. Or maybe i missed something in the translation.
Reply to this comment by doug Reichert on 01/03/2012
Hi Doug, Thank you for your post. I appreciate you taking the time to contact us with your questions and provide feedback about the blog.
While it may seem simple enough to provide detailed answers to every question, the reality is that more often than not there is not one simple, single answer. I appreciate your point of view and wish providing detailed answers was always an option, but because we service various types of mortgages, offer a variety of products and programs, and everyone has a unique personal situation it just is not possible. I do try to provide detailed answers to those questions where there is a universal answer, but when that is not possible I still want to acknowledge the post and let that individual know someone will be in contact to address their question. Not only to be courteous, but also so they will be on the lookout for an incoming email from one of our specialists.
In reference to your comments about the BiWeekly Advantage Plan, please understand The Plan is a completely optional service. The Plan is an optional tool for those customers who are interested in making scheduled additional principal payments to accelerate repayment of their loan. It is important to us that customers understand that they can always make additional principal payments without participating in the BiWeekly Advantage Plan. However, some customers prefer the convenience of a disciplined payment plan that is administered for them. Please also understand that The Plan does not modify the loan agreement in any way. It is simply an ancillary service that facilitates and automates making accelerated payments.
Reply to this comment by CitiMortgage on 01/20/2012 in response to doug Reichert
If you don't pay within 30 days then you will be denied deferred payment when you really need it....
Reply to this comment by Robert on 08/30/2011
Robert, I forwarded your information to someone that can assist you.
Reply to this comment by CitiMortgage on 10/26/2011 in response to Robert
Thank you for being the most disorganized company I have ever dealt with in my personal life. Your inability to take care of simple matters such as returning phone calls or even answering the phone ha created a monster. That would be me. I'm creating a blog of other customers remarks of your incredible business antics.
citigroupsucks.org is gonna take you down..............
Reply to this comment by Scott Arthur on 08/30/2011
I appreciate your frustration and apologize for the experience. I sent your information to one of our managers. Someone should have already made direct contact with you by now. If you have not been contacted, please contact me.
Reply to this comment by CitiMortgage on 10/26/2011 in response to Scott Arthur