Read this tip to make your life smarter, better, faster and wiser. LifeTips is the place to go when you need to know about Mortgage Refinancing and other Home Buying topics.
For those with mortgages who are considering a home refinance, there are some considerations that must be reviewed first. Home refinance can save hundreds of dollars a year in interest payments if done properly, but do not fall into the trap of refinancing just because you can.
Considerations of a home refinance include:
-- Home refinance rates
-- Length of mortgage
-- Adjustable or fixed mortgage
-- Time you plan to stay in your home
Home refinance rates can vary widely depending on the lender. Calculate your current annual mortgage payment and your projected home refinance rate and find out how much you will be saving annually. This will help determine if it is cost effective.
If you have been paying on your mortgage for 5 years and it was a 30 year mortgage, you will want to consider the added payments you will make if you pursue another 30 year mortgage when you are considering a home refinance.
Fixed rate mortgages are typically better for most borrowers; although for borrowers who plan to be in their homes less than five years, an adjustable rate mortgage may be a better alternative.
Make sure that you are aware of the downsides of a home refinance. Lower home refinancing rates do not always mean that they are a better deal than your current mortgage.