If you're considering a new mortgage for your home you might wonder if there is a best time to refinance. The news is filled with reports about the credit crisis in the mortgage industry and you might ask if refinancing under the circumstances is even a smart move? Here are several tips to help you decide if mortgage refinancing makes sense for your individual situation.
Deciding whether or not a mortgage refinancing is right for your situation depends on your goals for the new loan as well as your finances. There are several good reasons for refinancing even if you cannot qualify for a lower mortgage interest rate. Many homeowners choose to refinance their mortgages to consolidate their bills or simply borrow against the equity in their homes. Both are valid reasons for refinancing when you might not qualify for a lower mortgage rate.
The Two Percent Rule of Mortgage Refinancing
Many people tell you not to refinance your mortgage unless the new interest rate is two percent lower than what you’re paying on your existing loan. This “Two Percent Rule” is an oversimplification and bad advice. Instead of basing your decision to refinance on an arbitrary number, it makes better sense to base your decision on the costs/savings of the new loan.
Because you’ll be required to pay fees when obtaining a new mortgage you can easily base your decision to refinance on the amount of time it will take you to recoup this expense. Simply divide the total costs you’ll be required to pay by the amount you’ll save each month with a lower mortgage payment. This figure will tell you the number of months required to recoup your expenses from mortgage refinancing.
When to Refinance Mortgage
Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. To get your hands on this “Mortgage Refinancing Toolkit, " which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit .
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