Take Advantage of Low Mortgage Rates and Refinance Your Loan!
When you purchased your home there where certain factors that determined how much interest you had to pay on your loan. The main factors were the financial environment, your credit rating and the amount your were able to pay for the down payment. But as we all know, things in the financial world can change in a matter of seconds.
If interest rates have lowered since you purchased your home, you might consider refinancing your mortgage. When you refinance your mortgage you are basically taking out a new mortgage on your home. You can then take the proceeds from the new mortgage and use them to pay off the old one. The benefit is that your new mortgage will now be on more favorable terms.
Some people think refinancing means they are reworking the terms of their old mortgage. That is inaccurate. When you refinance, you are getting a completely new mortgage. Some look at this as starting all over.
To make this work to your advantage you have to know the perfect time to refinance. You also need to know how to approach the mortgage company, what to expect and whether or not it is the right thing for you to do. As you can imagine, this process can be very confusing and very intimidating. Especially if you are a first time homeowner.
Most people jump at the chance to refinance their homes because of the opportunity to save money. And while you can save money, what most people don’t realize is the substantial costs associated with a refinance.
Just like with your original mortgage, to refinance your home you will have to have an inspection, go through an appraisal and deal with closing costs and other fees. The only real difference between your original mortgage and a refinance is you may now be responsible for a prepayment penalty. That’s why you need to take your time and seriously weigh all of your options before deciding to refinance your home.
You need to do your research and make sure you understand not only how the refinancing process works, but also the different types of refinancing and the advantages and disadvantages of going with this option.
Generally speaking, those who refinance their home are looking for long term benefits. If you are after short term benefits refinancing is not the route you want to go. However, if done right, a refinance can help you improve your credit and over financial situation.
Purchasing a home is probably one of the biggest investments you will ever make in your life. It is a big asset and an even bigger responsibility. So take your time and make wise decisions. If you are considering refinancing your home go speak with a trusted financial adviser first. They will be able to advise you and let you know if it is a smart financial move.
If you don’t have a financial adviser you can always use one of the many online refinance calculators to determine if this is the best option for you at this time.
In case you want to find the lowest interest rates from lenders for your refinancing needs, use the mortgage rate comparison tool on our site.