Refinancing a Mortgage – The Costs and Benefits

If the near record low mortgage rates being advertised everywhere has you wondering whether now might be the time to consider refinancing your mortgage, here are some things to keep in mind:

First, use a good mortgage calculator to see how much you might save by refinancing to a lower rate. If you can save a significant amount each month, then consider how much you'll have to pay in closing costs to refinance. If you find that you'll save a considerable amount on the monthly payment in addition to factoring in your closing costs, then proceed with the type of mortgage you might want to consider.

Keep in mind if you currently have an FHA loan, FHA Streamline guidelines have changed, so you may have to do an FHA inspection whereas previously it was not required.

The next thing you have to consider is how long you’ve been in your current home. Lenders review your record of payment and the length of stay before approving your mortgage refinance. Also, keep in mind that the more you owe, the higher your refinance cost may be, due to fees, interest, and possible penalties.

Finally, don't forget about the appraisal process. Many property values have dropped recently, so make sure this won’t affect your refinance amount.

If you still have quite some time left before your home is paid off, refinancing now and locking in a lower rate can easily save you thousands in the long run.

If you have questions or comments about refinancing a mortgage, simply click the comment link below and ask away… we'll get back to you with answers, and your email address will never be published here, nor will it ever be shared with any 3rd parties.