Should You Refinance Your Mortgage?
- Date: 2007-04-27 - Word Count: 664
Share This!
With interest rates near all time lows, many people are refinancing their mortgages. Chances are one of your friends or family members has recently refinanced and reduced their monthly mortgage payment. Refinancing a mortgage is simply taking out a new loan with different terms - hopefully more favorable ones. Because your new loan will have a lower interest rate and different terms, your mortgage payments could be considerably lower. In addition to having lower mortgage payments, you will have the opportunity to change the type of mortgage you have. You may also wish to change the length of your mortgage from 15 to 30 years, or vice versa.
Perhaps now you have a better credit rating than when you took out your original mortgage, which will allow you to get better terms this time around. Your credit history will also have an effect on your mortgage interest rate. Refinancing will allow you to build equity in you home more quickly, and you will also be taking advantage of the equity you have already built. If you previously mortgaged $100,000, and you currently have a payoff balance of $70,000, refinancing could dramatically lower your monthly mortgage payment.
Before you decide to proceed with refinancing your mortgage, there a few things you should consider:
How much longer do you anticipate living in your present home? - If you will be living in your home for at least two or three more years, you should be able to overcome the costs of refinancing by lowering your mortgage interest rate. If your move will be sooner, you may find that the cost of refinancing will outweigh the potential savings from the new, lower interest rate.
If your goal in refinancing your mortgage is to build equity in your home, you might want to consider changing the length of your mortgage. By changing from a standard 30 year mortgage to a 10 or 15 year mortgage, you will build equity much more quickly. Applying additional payments toward the principal will also allow you to build home equity at an accelerated rate.
If you currently have an adjustable rate mortgage, or ARM, you have an excellent reason to refinance. While ARM,s tend to have lower initial interest rates than fixed rate mortgages, with mortgage rates near all time lows, now may be a good time to lock in a low fixed interest rate.
Consider how your credit status may have changed since you took out the first mortgage on your home. If you were forced to take out a sub prime mortgage because of poor credit, you probably have a much higher interest rate as a result. If you have worked to successfully increase your credit score, you should take advantage of this change in credit status and refinance. Your interest rate and monthly mortgage payments could now be much lower. , When you refinance a mortgage, you will go through a process similar to the one you underwent getting your original mortgage. You will have a good deal of loan paperwork to complete, and the lender will examine your income, employment history, credit record, and the amount of debt you carry. They will also want an appraisal, as the value of your home may have changed, affecting the amount of equity you have. Some of the fees you will incur when refinancing include closing costs, application fees, title insurance, points, and the cost of the property appraisal. Be sure to discuss these fees with your lender before commencing with your mortgage refinance.
No one knows with 100% certainty what will happen to interest rates over the next several years; however, from a historical perspective they are presently a bargain. If you find that refinancing your mortgage could benefit you financially, do some research to find the lender with the best rates and terms. Then don't procrastinate; if interest rates fall further you can refinance again. In all likelihood, interest rates will rise in the not too distant future, and you may regret not refinancing when you had the opportunity.
Perhaps now you have a better credit rating than when you took out your original mortgage, which will allow you to get better terms this time around. Your credit history will also have an effect on your mortgage interest rate. Refinancing will allow you to build equity in you home more quickly, and you will also be taking advantage of the equity you have already built. If you previously mortgaged $100,000, and you currently have a payoff balance of $70,000, refinancing could dramatically lower your monthly mortgage payment.
Before you decide to proceed with refinancing your mortgage, there a few things you should consider:
How much longer do you anticipate living in your present home? - If you will be living in your home for at least two or three more years, you should be able to overcome the costs of refinancing by lowering your mortgage interest rate. If your move will be sooner, you may find that the cost of refinancing will outweigh the potential savings from the new, lower interest rate.
If your goal in refinancing your mortgage is to build equity in your home, you might want to consider changing the length of your mortgage. By changing from a standard 30 year mortgage to a 10 or 15 year mortgage, you will build equity much more quickly. Applying additional payments toward the principal will also allow you to build home equity at an accelerated rate.
If you currently have an adjustable rate mortgage, or ARM, you have an excellent reason to refinance. While ARM,s tend to have lower initial interest rates than fixed rate mortgages, with mortgage rates near all time lows, now may be a good time to lock in a low fixed interest rate.
Consider how your credit status may have changed since you took out the first mortgage on your home. If you were forced to take out a sub prime mortgage because of poor credit, you probably have a much higher interest rate as a result. If you have worked to successfully increase your credit score, you should take advantage of this change in credit status and refinance. Your interest rate and monthly mortgage payments could now be much lower. , When you refinance a mortgage, you will go through a process similar to the one you underwent getting your original mortgage. You will have a good deal of loan paperwork to complete, and the lender will examine your income, employment history, credit record, and the amount of debt you carry. They will also want an appraisal, as the value of your home may have changed, affecting the amount of equity you have. Some of the fees you will incur when refinancing include closing costs, application fees, title insurance, points, and the cost of the property appraisal. Be sure to discuss these fees with your lender before commencing with your mortgage refinance.
No one knows with 100% certainty what will happen to interest rates over the next several years; however, from a historical perspective they are presently a bargain. If you find that refinancing your mortgage could benefit you financially, do some research to find the lender with the best rates and terms. Then don't procrastinate; if interest rates fall further you can refinance again. In all likelihood, interest rates will rise in the not too distant future, and you may regret not refinancing when you had the opportunity.
Related Tags: mortgage interest, mortgage interest rate, refinance a mortgage, refinancing your mortgage, lower your monthly mortgage payment
Gregg Pennington writes articles on a number of topics including mortgages, loan consolidation, and other loan related topics. For more mortgage information visit http://www.onlinemoneysources.net/mortgage.html. To find a loan or other sources of money visit http://www.onlinemoneysources.net. Your Article Search Directory : Find in Articles
Recent articles in this category:
- The Secrets to Getting Low Down Payment Car Insurance
Upon purchase of a new car, there is almost always a requirement to buy an auto insurance policy as - The Wisdom Behind Auto Insurance Comparison Quotes
No one in his right mind would not go for a good deal. In fact, everyone is out on their feet and ru - The Benefits of Auto Insurance Comparisons Florida
Insurance can be expensive. This is something everyone knows about especially in the sunny state of - Auto Insurance Florida: The No-Fault Policy
There are different kinds of car insurance offered by a wide range of providers today. Different sta - Finding the Cheapest Auto Insurance Companies
Everyone is asking and searching for the cheapest auto insurance companies available today. Consider - How do You Compare Private Health Insurance Cover in Australia?
Deciding what is the best and most affordable private health insurance cover can be easy if you take - How Payment Protection Insurance Was Mis-Sold
For over six years the issue of Payment Protection Insurance (PPI) and how it was mis-sold to custom - Finding Quotes For Auto Insurance Online
One of the many concerns when you are shopping for auto insurance is being able to get access to quo - How You Can Find the Best Auto Insurance Online
When it comes to renewing your car insurance you are going to quickly discover that there are a numb - Guidelines For Searching For Auto Insurance Online
The internet can be a great source of discounts and values related to auto insurance. However, many
Most viewed articles in this category:
- Trading Forex With Pivot Points
Forex Pivot Point Trading are used today by Forex Traders and are calculated on the previous days mo - Where To Search For Free Grants
Where do you look for free grants? The search must be thorough or it could be an exercise in futilit - The Connection Between High Blood Pressure and Salt
We are a society of Salt Addicts. It cannot be denied. When you look at the things we do and the pla - Tips For Avoiding HYIP Scams
Before knowing about HYIP Scams, refer to the functioning of HYIP or "High Yield Investment Programs - Getting Credit After Bankruptcy
Consumers do not have to live sans credit following a bankruptcy. By following certain steps consume - Tips For Choosing A Credit Card
Are you looking for that perfect credit card? If so, you may be confused about what exactly to look - Cheap Car Insurance For Teens Online
Many elements determine a car insurance policy. Car insurance companies look at the person's age, hi - What Exactly Is Free Grant Money?
You can apply for free grant money from various government agencies. But where exactly does this mon - Small Business Owners Marketing and Customer Service
Marketing can be time-consuming, but it doesn't have to be hugely expensive now, thanks to the Inter - Apply Online For A Credit Card - How To Choose A Card?
The best type of credit card for you will be dependant on how you intend to use the credit card. Are