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Home Mortgage Refinance – Why Or Why Not?

Knowing when the time is right or if you should do a home mortgage refinance is always a difficult decision for any homeowner. With fluctuating interest rates it is hard to time it perfectly. But we do have some important issues you can consider in advance so that you are prepared to move forward when the interest rate hits an appealing level for your next home mortgage refinance.Should I refinance or not? There are several factors to consider to answer this question such as:1. Interest Rate – Does the current market offer a lower rate than what I have? If your current rate is as good or close to the type of interest rate you can get then there is no reason to refinance unless you have other valid reasons. As a rule, you need to get at least a full one percent reduction in the rate to consider a home mortgage refinance if the interest rate is the reason for refinance.2. Am I Moving Any Time Soon – There are fees associated with a home mortgage refinance. Therefore, you need to consider how long you plan on living in the home. If you plan on moving any time in the next few years, it probably is not worth spending the money to get a lower interest rate or payment. Generally, it takes two or three years to break even on the fees associated with a refinance versus the monthly savings it generates for you.3. Terms of Current Mortgage – Taking advantage of the opportunity to convert your adjustable rate mortgage to a fixed term loan or to reduce your term from a 30 year mortgage to a 15 year mortgage can be a good reason to refinance your home mortgage as well. With low interest rates in the current market, you may be able to get into a lesser term mortgage with little to no increase in your monthly payment. This can save you a tremendous amount of money over the term of the loan.4. Tap into Equity – One last reason that you may consider a new home loan is to access equity in your home for a major purchase or expense that you have. Regardless of the reason, using your home equity is a good way to access needed money. The interest is usually tax deductible and the interest rates are lower than almost any other type of financing.

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