Should I Refinance My Home?

If interest rates have recently dropped dramatically or if you currently have an adjustable mortgage, you may want to consider refinancing. When you refinance, you are basically starting from scratch and applying for a new loan. Whether you choose to refinance with your current lender or work with a new lender, your new home loan will pay off the old home loan, and you’ll make payments according to the terms of the new loan. That means you’ll have to pay some closing costs, which can sometimes be very expensive.

Here are a few scenarios when it might make sense for you to refinance:

• You can get a significantly lower interest rate.
• A new loan will lower your monthly payment.
• You can shorten the term of the mortgage, which will allow you to build equity faster.
• You have an opportunity to switch from an adjustable rate to a fixed-rate mortgage.

What it comes down to is this: if refinancing will save you money in the long run (even if you just secured a new mortgage), you should strongly consider it.

BACK