Watch this before you refinance your home
Channel: Nick McLean Real Estate Group
Date: 2021-12-29

Should you refinance your home or look for a new one?

A common dilemma that homeowners have is...should I refinance my home? And they've really had this dilemma over the last two years because interest rates have been so darn good and so darn low.
The first thing you need to realize, homeowners, is that when you refinance, you're essentially buying your home again. That's what you're doing. You're not getting a new loan. You're buying your home again with a new loan, right? It's a refinance, but it's a new loan. 

You might be thinking, "Well, I don't have a down payment and there's no way to replace this home at the price that I'm getting refinanced for." Well, no, that's not exactly what's happening. You have to understand something. Let's imagine your home's worth $500,000 and your loan's $250,000. When you refinance, you're essentially putting that $250,000 down as a down payment. The bank is using your equity as the down payment so you don't have to come out of pocket with anything. It's no different than you selling it, getting the $250,000, and putting it down on something else but not many people consider that. 

So the first thing I want you guys to ask yourself is, "Would I buy this home again, compared to whatever else is on the marketplace?"

Another way to look at it is, would it make sense for you if you were looking to buy a new home to only look at one and ignore everything else, ignore all of the other possibilities for you and your family and your future? Does that make any sense at all? Absolutely not, because I can tell you this. The person that you were when you bought your home is not the person that you are now. I know that for a fact. Your kids are a different age, they've grown up, they've moved out, you're older, you have a different job, you have a different income, maybe you have a different career, or you have different hobbies. So we underestimate how much we change. It's true. 

You should be a little bit buyer beware when it comes to refinancing your home because the bank knows more about you than you know about yourself. I doubt you know how exactly how much your home's worth. The bank knows, oh yeah, they've done their research. They know how much, so when you get that postcard in the mail and it says, "You should refinance," guess what? That's because they've identified you as somebody susceptible to refinances, yeah, and they're going to give you what you want to hear, a lower rate, lower payment, lower everything. But do you really want to start over? Does that make a lot of sense? You already paid it down for five years. Do you want to go back to 30 all of a sudden? It doesn't make a lot of sense.

Pro tip: if you do look around for some other homes, I'm always looking for up-and-coming areas when I purchase homes. I love that. Some neighborhoods are improving, some are declining, it's happening everywhere.  Find the areas that are in the path of progress. Areas that have new lighting, new sidewalks, new parks, new trails, new opportunities It's happening in Moses Lake, it's happening in East Wenatchee, it's happening in Okanogan County, it's happening in Walla Walla, it's happening in all these areas we live in. The homes that are going to be worth more in the future are in the neighborhoods that are in the path of progress. Just think of these things, consider them, before you refinance. Talk to you soon.

Buying a Wenatchee Valley, Leavenworth or Chelan Area home? Search all homes for sale: http://www.nickmcleanrealestate.com/


Nick McLean Real Estate Group
29 S. Wenatchee Ave. Wenatchee, WA 98801
509-494-8100
nick@nickmclean.com