Who would have ever guessed that the day would come when homeowners and mortgage brokers would be talking casually about getting rates in the "low fours?" Well we are, and that has a lot of homeowners wanting to get in on the action. There's no question that lower rates equal lower payments or shorter terms, which ultimately puts more money in your pocket.

So is there a magic savings that makes the refinancing process worthwhile? Let's say you bragged to friends about your low rate a few years ago and have been ignoring all the recent talk of refinancing. After all, you already have a great rate. What's the magic number that would get you back to the table? A point? Half a point? It actually depends on several factors, so it's worth asking these 5 questions:

1. How soon until you recoup your closing costs?

Look at the anticipated total of your closings costs and see how long it will take you to get that money back. For instance, if your closing costs are $4,000 and the new rate will save you $500 per month, you'll see a return on your investment in only 8 months. Pretty good.



2. How long do you plan to live in your house?
   
Look at question 1. If you are not planning to stay in your house for at least as long as it will take you to recoup the closing costs, refinancing is not worth it.



3. Will you be borrowing more money?

Often times, people want to roll other expenses into their mortgages. It's a good time to do a bathroom renovation if you're signing on for 30 more years anyway, right? Perhaps. But with people so concerned about real estate values right now, unless you can really afford that project comfortably, hold on to the money.



4. Will you be able to leverage the money saved?

Research shows that people today are putting the money they save on lower rates into savings accounts or toward paying off debt. The money you save by refinancing can go further than ever toward paying off home equity lines - as those rates are even lower. Think how virtuous you'll feel socking away that savings every month.



5. Will you go 15 years or 30?

Paying off your home in 15 years is a very tempting proposition. You get a lower rate, and pay overall less for the home. However, this is only good for certain people. Once your house is paid off, it's harder to access the equity if you don't have an income. With an active mortgage, that is easier to do. For others, who want the knowledge that your house is paid off as soon as possible, it's a great time to take advantage of amazing rates.

7 Steps to Choosing the Right Contractor

Here at Westchester, I like to share tips with my clients about how to fix up their homes, prepare them for the next season, and make their homes more livable. This month I'm going to talk about the bigger projects.

Who comes to your house at 7 a.m., spends your money, and rips out your walls? Your building contractor, that's who! For these reasons and more, you really need to like and trust your contractor. Depending on the project, the relationship you have with this contractor will be long and close. You are likely to spend a lot of money on this project, too, so the selection process needs to be meticulous.

In the current economic state, homeowners can be choosy about who they want to work in their home. Look at the following seven steps before you hire anyone to do major work in your house.

1. Talk to family and friends.

A personal referral is probably the best way to get a good contractor. Talk to family and friends about who they used for home projects. You want to know if the person was trustworthy, stayed on budget, and kept to the time schedule.


2. Harness the power of the Internet.

Of course, you can start with a good old Google search, which will take you to the different contractors' websites. You can also try some search sites that vet the contractors for you and help you get in touch with them, such as www.servicemagic.com. Some local areas have their own contractor search service.


3. Check City Hall.

Before you sign anything, check with your local government to make sure that the contractor is licensed and insured.


4. Call the references.

When the contractor provides you with references from recent jobs, call them! Too many people blow off this step to their peril. Another great step is to call references who did jobs five years earlier, so you can see how the contractor's work is holding up over time.


5. Be sure to get a detailed estimate.

Make sure that the estimate includes how much you will pay at what time, and what will be complete when.


6. Don't be afraid to talk money.

Remember, these contractors are bidding for your work, so it's OK to talk about what others are offering. If one seems expensive and you tell him that, he may be able to give you good reasons for the price - and you may decide those reasons have good financial value, too.


7. Don't forget to trust your gut.

Let's say you've gone through steps 1 to 6 and the contractor you are considering has passed every step. You know you should hire him, but something doesn't sit right with you. Trust your gut and keep looking. You need to have a good rapport with this person. As I said before, he will play a major role in your life for as long as the project lasts.

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