When Should I Refinance My Mortgage?

The low interest rates can be tempting, but is refinancing right for you? Ask yourself a few questions and see if you should refinance your home.

There are a lot of companies out there advertising low interest rates promising consumers they will save money. There are a few things to take into consideration before you jump into refinancing your home to make sure it is the right decision for you in the long run.

What are you trying to Accomplish?

Reducing the interest rate is the most common goal when refinancing, but you can also change the length of your mortgage. Extending it out again to a 30 year term will also help in reducing the monthly payment.

Consolidation is also a reason for refinancing. Combining a first mortgage and another mortgage such as a home equity mortgage will help to level out payments.

When is Refinancing Right?

To decide if refinancing is the right thing to do, make sure your end goal is accomplished. Refinancing doesn’t necessarily mean you will save money in the long run. If you just need to save on your monthly payments in order to hang onto your home, then refinancing may be a good idea.

Refinancing may also be a good idea if you need to get out from under an interest only mortgage or an adjustable-rate mortgage.

When is Refinancing Wrong?

If you are looking to save money in the long run, refinancing may not be the right move. You need to look at how long it will take you to recoup the cost of refinancing. If you plan on moving out of the house before you are able to recoup the costs, then you will end up losing money.

Refinancing is a big decision that has long term effects. Make sure you consider it carefully and do your homework.

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