When to Refinance Your Home

[Admin]

Whenever you decide to refinance, there should always be enough reason or benefits to justify the transaction. Lenders that simply refinance you for the sake of making money, with no foreseen benefits, are known as Predatory Lenders. These type of lenders should be reported to the proper authorities immediately.

Here are justifiable reasons to refinance:

• To convert from an Adjustable Rate to a Fixed Rate Mortgage.
• To lower your interest rate or monthly payments.
• To consolidate or payoff your debts.
• To get cash out for home improvements or large purchases.

[Jenita]

Refinancing your home can cut your monthly mortgage payments. It also may allow you to tap into the equity in your home to pay off other loans and credit cards–—while still deducting your mortgage interest from your taxes.

Step One
Find current interest rates in most major Sunday newspapers (in the real estate section) or contact a mortgage broker.
2Step Two
Identify the type of mortgage you want–—fixed, adjustable or a combination of the two.
3Step Three
Compare the new interest rates to that of your current mortgage.
4Step Four
Use the amount you owe on the loan to calculate what the new monthly payment would be by using a financial calculator or an online mortgage calculator. You'll need to know the new loan amount (current loan amount plus closing costs, such as points, title and escrow fees–—unless you plan to pay for them out of pocket–—the new interest rate, and the number of months of the new loan).
5Step Five
Subtract your current monthly mortgage payment from the new monthly mortgage payment; this is your monthly savings.
6Step Six
Divide the monthly savings into the total cost of the loan (including points, title and escrow fees). This is the number of months it will take to recoup your investment.
7Step Seven
Determine whether you plan to live in your home longer than it will take to recoup your investment. If so, refinancing is probably a good idea

[master01]

Effective refinancing typically means lowering your current mortgage loan rate by at least one percent. You might also want to consider changing the length of your loan or receiving cash from the equity in your house. It's simple to see what will work for you, just run the numbers for yourself using our Refinance Calculator.