Home Refinancing

Home refinancing is often a great way to lower reduce your mortgage payment.  People who got into their home with an A.R.M. - Adjustable Rate Mortgage, or balloon payment, can sometimes get caught off guard and be at risk for losing their homes.  There are settling expenses, closing costs, fees, and sometimes points.  All of them cost you money on your home refinance.  Be sure to compare several mortgage lenders.

Usually it is advisable to get home refinanced with a fixed interest rate.  But a refinance isn't always a good idea, even when it is giving you a lower payment.  For instance, if there are $2500 in closing costs, and your payment will be $100 lower after the home refinance, it will take 25 months for you to break even.  No problem as long as you are confident you won't be moving or selling the house in that time frame.  Be conscious of your life situation.  Is there a marriage, divorce, or career change on the horizon? 

If you aren't comfortable with the complexities of doing the math yourself, or just to double check your own numbers, ask your potential mortgage lender how long it will take you to break even on the home refinance.  This is an intelligent question they will respect, and the most important one to help you make an informed decision.

If you are thinking of doing a home refinance in the near future, be sure to consider that your credit score will affect your ability to get a better interest rate.  Avoid making any large purchases, applying for new credit cards, or increasing your debt in any way for about 6 months prior to refinancing your home's mortgage.  Ask your friend's to recommend a good home mortgage lender.  You don't have to refinance with the same company you have your mortgage with now.  Any mortgage lender should be able to assess your situation.  If you don't get the answer you want at first, keep shopping for a home refinance until you find the mortgage lender that is right for you!

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