Living in Greater Phoenix is a dream come true for many who enjoy great weather, vibrant communities and a wide variety of things to do!  If you’ve lived in Greater Phoenix for some time, whether in Chandler, Scottsdale, Avondale, Sun City or any of the surrounding cities, chances are you’ve considered the possibility of refinancing your home.


Refinancing your Greater Phoenix home has been more at the forefront of people’s minds given the last few years of the national real estate market.  They wonder what their home is currently worth and if there’s a possibility of lowering their monthly payment.  


As Greater Phoenix Real Estate agents, we’re often asked about refinancing so we thought we’d provide you with six tips to determine if refinancing your home is right for you.


1. Interest rates- Refinancing right now is great for homeowners whose current rates are above 5.5% and are hoping to save on their monthly mortgage costs.  For a home in Greater Phoenix; you could potentially save a percentage point or more on an outstanding mortgage.


2. Credit score and income- Most banks in today’s market will require you to have a minimum credit score of 620 in order to refinance.  You will also need to prove that your household finances have been stable.  If unemployment or other issues have come up that have decreased your finances significantly; you’ll find it hard to refinance.


3. Costs- Refinancing your home will cost you typically 2% of the new loan amount.  This includes application, appraisal and inspection fees. Included within refinancing costs is the new escrow account you’ll need to fund. The lender will set up this account for home-insurance and property-tax payments from which they’ll draw annually.  Want to avoid this fee?  Use the same lender you used for your initial mortgage.  Their only costs are limited to issuing new paperwork, so they’re able to keep costs low and can oftentimes speed up the process. Another option is a good faith estimate. Your  Greater Phoenix Real Estate agent can help you determine which option would work best for your home.


4. ‘Underwater’ homeowners- Today’s housing market has left around 11 million homeowners “underwater” meaning they owe more on their home than it’s actually worth.  They will have a hard time refinancing and can only do so through a federal program. Your Greater Phoenix Real Estate agent will help explain the option of a “short refinance” that was launched last year by the FHA.


5. Adjustable-rate mortgages- Determining whether you’d like to go with an adjustable-rate mortgage or a fixed-rate mortgage can be tricky.  An ARM can be a good choice for today’s market as you’ll cash in on the current lower rates, but can be unstable in the long run.  However, a fixed-rate mortgage ensures that your rates will remain stable and won’t rise if the market changes.


6. Greater pricing disparity- Based on your current credit score, the rates offered for refinancing can vary greatly. Lenders will look at the Arizona’s average loan-to-value ratio and the percentage of homes with negative equity.  The higher the percentage of these homes, the higher the rate a borrower will most likely be offered.


If you’re considering refinancing your Greater Phoenix home, we hope these tips will help you determine your next steps.  As trusted Greater Phoenix Real Estate agents, we’re also here to help you in any way we can!  Please feel free to contact us with any questions you may have about the Greater Phoenix Real Estate market.


We look forward to helping you each step throughout the process!

The Russo Team
Greater Phoenix Real Estate Experts

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