When is the Right Time to Refinance Your Mortgage?


Visitors: 523

You've heard that interest rates are down and you think it could be time to refinance your existing mortgage, but the entire loan application process was so exhausting during the initial loan that you aren't sure it's worth the hassle. You could very well be right, but there are some things you can do to help decide whether it's time to refinance your mortgage.

The first thing you need to verify is the interest rate for your existing mortgage and the interest rates being offered across the board for new loans. If there's not at least a one and a half to two point difference, you're probably not going to be significantly better off to refinance your mortgage. Here's why.

Remember those closing costs on your initial mortgage? You probably paid for an appraisal, perhaps a home inspector's services and even a survey if you have rural property. Depending on how long it's been since your original loan, you may be faced with having all those processes repeated. Especially if you are going with another lender, have had the existing mortgage for at least two years, have made major modifications to your home or property, or have seen some significant variations in property values in your area, you're probably going to be required to have an appraisal at the very least. While it's not a huge cost for an appraisal, comparing that with the amount you're going to save on a slight drop in interest rates could show that it will take months to recoup that expense. Don't forget that you'll likely have some additional closing costs from the lender on the new mortgage (you are, after all, taking out a new mortgage even though you have an existing loan) and you may even be facing penalties for paying off your existing loan early. Weigh those costs against what you expect to save before you take this step.

So does that mean that you should never refinance an existing mortgage? Actually, there are plenty of opportunities when refinancing your mortgage makes good financial sense. If you've significantly increased the value of your home or have been paying for several years, you may have enough equity to qualify for a better interest rate. You may also lower monthly payments or refinance to make improvements. In the end, it's up to you to weigh the costs of refinancing your mortgage and decide if the time is right for you to take this step.

Mark Lambie is the founder of The Loan House a website that allows consumers to quickly and easily get free mortgage quotes and mortgage information.


Article Source:

Rate this Article: 
Refinance an Adjustable Rate Mortgage - Should You Pay Points When You ..
Rated 4 / 5
based on 5 votes

Related Articles:

Is It Time to Refinance Your Adjustable Rate Mortgage?

by: Louie Latour (June 12, 2007) 
(Finance/Mortgage Refinance)

Refinancing Your House? Time is Money With Mortgage Refinance

by: Carrie Reeder (November 14, 2005) 
(Finance/Mortgage Refinance)

Refinance Your Mortgage - You Could Save Thousands Or More Dollars Over Time

by: Ken Austin (November 13, 2005) 
(Finance/Mortgage Refinance)

Refinance Mortgage: Get Cash Back When You Refinance Your Mortgage Loan

by: Louie Latour (September 25, 2006) 
(Real Estate)

Benefits of Equity Home Loan Mortgage Refinance Now is the Time to Take ..

by: Yvonne Suzannah (July 23, 2008) 
(Finance/Home Equity Loans)

Cash Out Refinance Mortgage Loans - Home Equity, 2nd Mortgage or Cash Out ..

by: Carrie Reeder (March 29, 2005) 
(Finance/Mortgage Refinance)

Refinance Mortgage: Should You Refinance Your Adjustable Rate Mortgage

by: Louie Latour (September 23, 2006) 
(Real Estate)

Mortgage Refinance Information - Should You Refinance Using a Mortgage Broker

by: Louie Latour (November 03, 2006) 
(Real Estate)

Standard Mortgage Refinance Vs Home Equity What is the Best Refinance Home ..

by: Darin Sewell (September 23, 2008) 
(Finance/Mortgage Refinance)

Refinance an Adjustable Rate Mortgage - Should You Pay Points When You ..

by: Darin Sewell (July 30, 2008) 
(Finance/Mortgage Refinance)