Questions to Ask Yourself before you Refinance your Home
Before you decide to refinance your home, there are four essential questions that you need to ask yourself: what is your current mortgage rate and balance? What are the rates available if I refinance? How much is it going to cost me to close the loan? How long do I plan to stay in my home?
If you don’t know how much you owe on your mortgage or the rate you can easily find it on a current statement or by contacting the lender. You want to look at the principal balance that is due. Mortgage rates are continually changing so it can be hard to keep on top of them. For the latest information take a look at www.interest.com. The goal of refinancing should be to reduce the amount of time it takes you to pay off your loan instead of getting a lower payment.
Make sure you lender discusses the with you the cost of refinancing your home. The costs involved will be different based on where you live but in most cases they include fees for an appraisal, lawyer fees, and lender fees. You need to compare the cost of these fees to what you will be saving so that you can calculate how long it is going to take you to benefit from them. To do this calculation accurately you will need to know the length of the new loan. If you won’t be staying in your home for very long then chances are you won’t be getting any benefit in the long run from refinancing the loan.
Don’t let this information overwhelm you. Take the time to talk with a couple of qualified lenders who can look at your situation and help you decide on the best options. Make sure you feel comfortable with who ever you decide to work with because communication is going to be key to getting the process completed.