Essentially, you have to determine: Is the cost and time it takes to refinance my home mortgage going to be worth it for the total sum of money I will save? One thing is for sure, if you have the right situation you can definitely benefit from refinancing your home mortgage loan.
The optimal way to figure out whether you are in that desired position is by speaking to lenders and begin comparing interest rates.
Millions of individuals refinance their primary mortgage because there are many appealing reasons to do so. Given you have the proper situation, refinancing your home mortgage can be one of the smartest financial decision you make this year.
Every component is used to determine your refinance: your house value, credit rating, current equity, interest rates, employment, cash on hand and debt standing.
Any of the following “may” be the right reason for you to refinance:
- Taking advantage of a lower rate of interest is key
- lengthen or shorten your loans terms (15 year versus 30 year)
- Lowering your monthly payments
- Using your equity to draw cash out
Avoiding huge closing costs will probably be the biggest hurdle associated with refinancing your home mortgage.
Take into consideration how many years you have been paying on your current mortgage, the interest per month vs. principle pay down per month on the new versus old mortgage will be a consideration. When you refinance you will once again be making the vast majority of your payment to interest.
You also have to consider how much longer you will remain in your home as the average borrower only stays in any one home for 5 years.
If you’re going to save $1,800 a year by refinancing and the closing costs you have to spend total $4,500, you’ll have to own that home for at least 2.5 years years to realize any savings.
Irrespective of any of these concerns, if the situation for refinancing looks financially correct then you can save a lot of money by refinancing your current mortgage. Do the research by comparing mortgage rates, time is of the essence and it may not be in your favor, but why?
Inflation Headed Skyward
Recently, reserve head, Ben Bernanke, lowered short-term interest rates, which will affect both fixed rates and those with adjustable-rate mortgages.
What this means to you: money is cheaper now, but if you wait until the inflation monster gets going, borrowing that money may be all but impossible. Interest rates will only be going higher for decades to come.
So if your asking yourself if you should refinance your mortgage then it is time begin your search by comparing interest rates now.
Get in contact with multiple lenders, do your homework, and find a mortgage loan that is right for you. Start on one of the tracks above.