Are You Thinking About Refinancing?

If you tune into the radio or watch television in the evening you will be bombarded with commercials offering incredibly low-interest rates to refinance your home. These rates may sound enticing, and you may be wondering if it’s time for you to refinance your home loan. While refinancing can make financial sense in some situations, not everyone will benefit. There are many factors to consider. Most people consider refinancing to lower their interest rate. Even a slight change in the interest rate may add up to significant dollars over the life of the loan.

Some of the things to consider when you are thinking about refinancing are:

1.)When evaluating the new loan, remember to add in any additional costs. Ask your lender if you will be responsible for paying closing costs or appraisal fees before jumping at a lower interest rate.

2.) The length of the loan is also important to review. Will you be restarting the clock on a 30-year mortgage? It is recommended that you not refinance your home for longer than the years remaining on your current loan.

3.) One great reason to refinance your home is to eliminate paying PMI (Private Mortgage Insurance) or convert from a variable-rate loan to a fixed-rate loan.

4.) First-time borrowers may have had limited options for the original loan. But now that they have more equity and perhaps stronger credit, a refinance can often put these borrowers into a better loan.

5.) A refinance can also offer a way to consolidate higher-interest debt by pulling money from the home to pay off credit cards or car loans. This is definitely something you will want to think about before doing as you will then be paying for those debts over the life of your mortgage loan.

If you are thinking about refinancing, the offers are everywhere. It may be a great time to take advantage of lower rates and lock in some savings. Just remember to consider all of the costs associated with refinancing before assuming it’s a good financial decision.