Should You Refinance?

There are several reasons that might make someone consider refinancing their existing mortgage. One would be to get a lower interest rate than what they currently have, thereby reducing monthly payments and lowering the overall cost of the mortgage. Another is to shorten the length of the loan, which can save quite a bit in interest payments. Thirdly, someone may have other debts that they wish to pay off, and refinancing may provide them a means of consolidating that debt into one overall lower payment.

A lower interest rate isn't the only thing that should be taken into account when thinking about refinancing. There are costs and fees associated with refinancing your mortgage. The bank will charge fees, there will be costs for a new inspection and a new appraisal, title search, and so on. The process that is gone through is very much like the process that one goes through on getting a first mortgage. It requires a new application with a new credit check, survey, and sometimes an appraisal. As it is with a first mortgage, this can be a long and costly process.

In general, it makes sense to refinance if the interest rate on the new loan is at least two percentage points lower than that of the current loan, although this is not always the case. Some things that need to be taken into consideration are the total cost of the refinancing, the total monthly savings, and how long you plan to stay in your house after you refinance. You can calculate how long it will take you to break even on refinancing costs by dividing the total cost of the refinance by the monthly amount you will be saving. For example, if the cost is $2,500, and you reduce your monthly payments by $100, then it will take 25 months to start seeing the savings from the reduced mortgage rate. If you plan on staying in your house longer than this, then it may just make sense for you.

Another reason that someone might consider refinancing is if they are trying to consolidate debt. In such cases, there is also the tax impact that one should look at. Many loan types are not tax deductible, whereas mortgage loans are. Therefore for that reason alone it may be a good idea to consolidate outstanding credit card debt, student loans, car loans, as well as others.

Some people may not have a choice about refinancing, it is a must for them. This happens in cases where they have a loan with a balloon payment coming up and no conversion option. In instances like this the best bet is to refinance the mortgage a few months before the balloon payment is due.

If you do decide that the costs associated with doing a refinance outweigh the benefits, you should ask your bank or financial institution if you can get some of the terms that you want by agreeing to a modification of your current loan. However you choose to go, remember that it always makes sense to consult with a mortgage professional before making your move. This can end up saving you both time and money. You should also do research before making a decision. Spend some time on the web familiarizing yourself with what you are getting yourself into. Take the time to read up on and understand what your options are.

More on Mortgage Refinancing.

Michael VanDeMar

---

Mortgage Brokers or Banks: Which is Right For You?

When you're looking for a home loan, you might work... Read More

Online Mortgage Brokers - What You Might Not Know About Home Loans & The Internet

You may think that applying online for a mortgage is... Read More

Why You Should Not Get Hung Up on the Interest Rates!!

This is what a mortgage can do for you!AND Why... Read More

Benefits of a Remortgage

There are many benefits in choosing a remortgage, some of... Read More

Keep Your Eye Focused on Treasury Bond Rates To Adjust Your Current Mortgage Rates

Mortgage rates typically are based off the current rates of... Read More

Refinance Mortgage Loan ? Tips on Refinancing Your Home Mortgage

Refinancing your home mortgage can come with some great perks.... Read More

Bridging Loan Basics

A Bridging Loan is a short-term loan used as a... Read More

Financial Rebirth Through Remortgage

Seldom in ones life do we get a chance to... Read More

How Much Interest is Your Home Equity Earning?

How much interest are you earning on your home equity?... Read More

Build Your Own Dream House!

So you're thinking about building your own house, are you?... Read More

A Guide to Finding the Cheapest Home Improvement Loan

To find the cheapest home improvement loan that you can,... Read More

Home Loans and Mortgages ? Watch Out for Dangerous Subprime Loans

With the growing interest in real estate purchasing and speculation,... Read More

Home Improvements Turn Average Homes into Dreams Come True

If you're thinking about taking out a home improvement loan,... Read More

Who Else is Ready to have Their Money Work Harder for Them?

What does it mean to refinance? Why would anyone want... Read More

An Infinity Mortgage?

Here in Spain the concept of a mortgage period of... Read More

Home Buying ? What Can You Afford?

Okay, you've decided to buy a home and are trying... Read More

Should You Choose to Refinance?

Refinancing has become a valid option for many individuals with... Read More

Home Equity Loans - Are They Right For You?

The bills are out of control and you need a... Read More

Understanding UK Bridging Finance

Bridging finance, also referred to as "bridge loans" and "bridging... Read More

Mortgage Loan Information - Know The Basics When You Refinance or Purchase a Home

If you are currently looking for a new home, chances... Read More

Bad Credit Home Loans - Pre-Approval is Still Possible With Adverse Credit History

If you are among the millions with less than perfect... Read More

Avoiding Foreclosure Scams

If your mortgage company is threatening foreclosure, there are things... Read More

How To Get The Best Home Equity Loan

Are you wondering how to get the best Home Equity... Read More

A Guide to Finding Cheap Homeowner Loans

If you're actively looking for cheap homeowner loans, there are... Read More

Financing the Purchase of Foreclosed Homes

Homes that have been foreclosed can be one of the... Read More

Buying a Home With Bad Credit - Why a Recent Bankruptcy Will Not Stop You From Getting Approved

Buying a home with bad credit is possible with the... Read More

Home Equity Loans - 5 Useful Application Tips

Obtaining a home equity loan does not have to be... Read More

Selecting the Right Mortgage for You

A mortgage is a loan you take out to buy... Read More

Mortgage ? What, Why, When, and How?

What is a mortgage? Here's what The New Merriam ?... Read More

New Home Loan - 3 Tips To Speed Up The Mortgage Loan Approval Process

Imagine this: you've found the perfect house, and feel lucky... Read More

Mortgages - Which Loan is Right For You

When buying a home, you need to take a home... Read More

Home Mortgage Quotes Online - How Do They Compare To a Quote From a Broker in The Real World?

Online home mortgage quotes are very similar to the quotes... Read More

Total Cost Of Credit vs Monthly Payments

I read a press release the other day which points... Read More