Refinancing Your Home Mortgage Loan - Is Refinancing For You?

Refinancing is the act of paying off one loan by obtaining another, using your home's equity. Refinancing is generally done to secure better loan terms, such as a lower interest rate and lower monthly payments. If you are thinking of refinancing, you should analyze your current situation to find out if refinancing is the best choice for you.

Refinancing your home can seem like the perfect solution to having more money in your pocket by way of reducing your monthly payments, and/or having money to pay off pending debts, or buy that new item or vacation that you just cant live without. Yet, refinancing isnt as easy or infallible as it may appear. There are many costs and potential downfalls to refinancing, so before you sign on the dotted line, you may want to look at the entire picture and use good judgment to decide if refinancing is the best decision for you.

Remember the fees incurred in your first mortgage? Be prepared to dish them out again when refinancing your home. There are application fees, title search and title insurance fees, appraisal fees, survey costs, homeowners insurance, attorneys fees, loan origination, and inspection fees, as well as mortgage insurance and points. Unless your interest rates and monthly payments are being significantly reduced, you may not be saving much in the end.

Will your interest rate be lower? Compare your interest rate to the current interest rate. In the end, what are your total savings?

How long do you plan on staying in your home? If its three years or more, it may be a good idea. How long will it take to break even before you recover the closing costs? Do you have cash for closing? Is refinancing something you can afford at the moment, to gain better terms in the long run? Is the value of your home increasing (excellent) or decreasing (could be an issue)?

If you are considering refinancing, remember that there are a variety of different mortgages to choose from. Educate yourself on your options and take all information into account. If you are getting a significantly low interest rate, then refinancing may be the best choice. Talk with your lender to find the best options available for your unique situation.

See Also:

Mortgage Refinancing - 7 Important Things To Keep In Mind
In today's world, it seems that almost any topic is open for debate. While I was gathering facts for this article, I was quite surprised to find some of the issues I thought were settled are actually still being openly discussed.Mortgage refinancing loans experience a boom whenever rates are low. A ... more...

How Refinancing Works
Refinancing has become an increasingly popular method of loan management in the past several years, but there are still a lot of people who aren't exactly sure what it means to refinance a loan or how refinancing works.Though refinancing can be handled in different ways depending upon the lender ... more...

Ask the Expert: When Do I Refinance My Home?
Home refinancing is a wonderful financial tool for homeowners to use for debt management to investments. If the home refinance is used correctly, wisely, and at the right time, the benefits from the refinance can improve the financial picture of the homeowner. There is no cookie cutter approach ... more...

Refinancing Your Mortgage Can Really Save You Money
Refinancing a mortgage is simply taking out a new mortgage. It means paying off one or more old debts by getting a new loan. Sometimes, refinancing your mortgage can really save you money. You may be able to pay less interest, lower your monthly payment, or convert from a 30-year loan to a 15-year ... more...