|
To Refinance Or Not To Refinance?
Hedging your bets isn’t just the stuff of
Shakespearian tragedy; any homeowner with a mortgage has to do
some serious mulling over when it comes to refinancing. The
question that seems to be the most difficult to answer is when
should you refinance? While the answer to that is far from
simple, there are some important issues that need considering.
The general rule is that when the interest
rate on your mortgage is at least two percentage points higher
than the current market rate, then it may be time to refinance.
The two-percentage point difference will give you a reasonable
buffer between the costs of refinancing a mortgage and the
savings you will receive.
You also need to consider how long you plan
to stay in the house. Most experts believe that it takes at
least three years to get the full advantage of the savings from
a lower interest rate. You may not want to refinance if you plan
on moving in a year or two.
Refinancing can be a good option for
homeowners who have an adjustable-rate mortgage and want to
exchange it for a fixed-rate loan so that they’ll know exactly
what their mortgage payment will be for the life of the loan.
They may also want to convert to an adjustable-rate mortgage
with a lower interest rate or better payment cap than the one
they currently have.
Equity is another issue that may help
answer the question of whether or not it’s time to refinance.
For borrowers who want to build up equity more quickly,
converting to a mortgage with a shorter term will certainly
accomplish that. This is especially important if you plan to use
the equity built up in your house to finance a major purchase or
for your children's education.
Here are our recommended sources for good refinance mortgage lenders online:
|
Top Recommended Companies For Refinance:
Are you in the UK? Visit Our UK Loans Page:
UK Lenders |
|
