| Just like any other financial decision you have to make | | | | definitively know what would be the prevailing rate 12 |
| in your life, understanding when to refinance your | | | | months from now. So if the rate hits the lowest today, |
| mortgage will make a world of difference. Alternately, | | | | switching to fixed rate mortgage is the best idea. |
| knowing when it is not a good idea to apply for a | | | | Understanding your goal doesn't always mean you |
| mortgage modification will ensure that you will not get | | | | have the right to take the loan. Sometimes, |
| screwed with any hullabaloos in the market. | | | | understanding would mean letting go of lower rate |
| In practical terms, mortgage refinancing is about saving | | | | after realizing that such move is unwise. |
| money on total loan amount and monthly mortgage | | | | When to Refinance |
| fees but there is a good time to make a move. | | | | Low rate is a good trigger to consider refinancing, but |
| The 2%-Rule | | | | other factors have to matter. Refinancing costs |
| One of the best times to refinance your home is when | | | | money. In 2008, the national average for closing cost |
| you can get an interest rate that is two percent lower | | | | on a $200,000 loan is $3,118 – according to |
| that what your current loan offers. Ideally, 2% is | | | | Bankrate closing cost survey. This does not include |
| enough to recoup the cost of the loan. However, there | | | | other fees such as insurance, taxes, and other dues. |
| are certain requirements you must meet if you want | | | | To recoup the cost and get the savings promised by |
| to take advantage of lower rates including your credit | | | | your new mortgage, you have to consider how many |
| score and the amount of equity left in your home. Also, | | | | months are you willing stay on your property. For |
| take note that you have to stay in your properly for a | | | | example, your new loan will save you $150 on your |
| certain period of time (called the break-ever period) to | | | | monthly payment and the closing cost of your new |
| recoup the cost you paid for the new loan. As a | | | | loan is $3,118. It will take you 21 months to recoup the |
| general advice, avail refinancing if the prevailing rate is | | | | closing cost. Monthly savings are influenced by several |
| low. | | | | factors including points, credit score and rate. |
| Clear Goal | | | | Tools |
| Many homeowners wish to refinance their mortgage | | | | Mortgage calculators will help you determine how |
| because they have a goal in mind. Some want to | | | | much savings you will get every month with your new |
| consolidate debt through refinancing. A common | | | | loan. These tools are available online, free of charge. |
| misconception is if making such move will pay off debt. | | | | Mortgage Consultant |
| Wrong. Entering into consolidation only restructures | | | | Bad advice leads to bad credit debt so make sure that |
| your debt. So if you owe $10,000 from your credit | | | | you consult a reputable mortgage advisor to help you |
| card company, refinancing will not pay them off; it will | | | | know if mortgage refinancing is really for you. |
| only extend it throughout the life of your loan. | | | | Consultation is usually free and you are under no |
| Homeowners also refinance their mortgage because | | | | obligation to continue dealing with an advisor if you feel |
| they want to switch from ARM to FRM. Adjustable | | | | uncomfortable with him/her. |
| rates can be a headache. For one thing, you cannot | | | | |