Almost everyone has done or thought about refinancing at some point. We've seen all the commercials telling us to do it. In the past few years, rates have been at record lows, which has helped many people lower their monthly payments by refinancing.
It can be hard and hard to figure out how to refinance your mortgage. There are a few things you should think about when making your choice.
First, even a small cut in interest rates can pay off fast.
Second, if you plan to live in your home for at least three to five years, it may make sense to pay "points" and closing costs to get the lowest rate. A "point" is equal to 1 percent of the loan amount.
And third, if you add the fees and closing costs to your new mortgage, you can avoid a cash down payment and still get a low rate. This doesn't mean you have to take on a lot of new debt. If you've had your current mortgage for at least three years, you've probably paid down your balance by several thousand dollars. So you might be able to add your closing costs to your new loan, lock in a lower rate, and still end up with a lower mortgage amount than you had before. More importantly, a smaller payment every month.
Another thing to think about is how long you plan to live there. If you plan to move in the next few years, the savings you make each month may never add up to the costs of refinancing.
You might have used a mortgage from a finance company to buy your home, or you might have taken out a second mortgage to pay for central heating or furniture. Some loan companies charge interest rates of up to 50%, so it's likely that your payments are very high. Look carefully at the fine print to find the real rate. Most mortgage refinancing loans are for a short amount of time, no more than 15 years.
HOMEOWNERS Please get the BEST rates on loans that are available right now.
