Should I Refinance?

June 2nd, 2008

Tip! If you have high interest loans or credit cards you need to refinance right away. It may seem like you are not accomplishing much by refinancing and paying off your high interest loans or credit cards, but you are saving so much money.

There are many factors to consider before refinancing. Besides the obvious concerns of what lender to choose and how long the process will take, examining your long term choices are essential.

If you have less than ten years left before your current loan is paid off then, unless you have a major financial need, it may be best to hold off refinancing and look into a second mortgage of some sort. If you have a good length of time before your loan is paid off the rule has generally been to look for an interest rate at least 2% lower than what you currently have. By lowering the interest rate by this amount your monthly payments will be significantly less if you refinance on the same term length you currently have. On the other hand if your current payments aren’t too much too handle refinancing with a shorter term and significantly lower interest rate will keep your payments relatively the same but you are able to build equity much faster.

Tip! It is recommended that you fill in all the application forms you can find. You may be able to end up with a much better interest rate if you refinance and not stay with your current finance company.

Are there any cases in which you should settle for less than a 2% interest rate reduction? The short answer is yes. A good example would be if you have an adjustable rate mortgage (ARM). Even if the rate isn’t significantly lower than what you currently have, being on a fixed rate and knowing that there aren’t any surprises around the corner is often worth doing the refinance.

Contrary to what many lenders tell you it is not always financially sound to refinance. Make sure the interest rate you’re getting is good enough to make a difference and make sure you plan on being in your home long enough to reap the benefits. Every individual situation is unique so just make sure to decide carefully.

Go to http://www.refinancesmarts.com to obtain some information on the Home Refinancing Steps you should take when refinancing your mortgage.

Tags: , , , , , , ,

Tags

Entry Filed under: Refinance Rates

Main Menu

Calendar

January 2009
M T W T F S S
« Dec    
 1234
567891011
12131415161718
19202122232425
262728293031  

Most Recent Posts