Home Refinance-Is it Right for You?
When a homeowner has an existing loan on a property but wishes to obtain a second mortgage in order to repay the original mortgage this is known as a home refinance. There are numerous cost savings that can result from this type of situation.
When a Home Refinance is Merited
Many people consider a home refinance when interest rates begin to drop considerably. It is important to understand that even a slight change in an interest rate can result in a significant cost savings over the course of the loan for the homeowner. Before you make a final decision to refinance your home; however, you should carefully consider all factors. Some factors which should be taken into consideration before refinancing include:
- The potential savings that will result from the home refinance
- The reduction in interest rate on the home refinance
- The balance on the existing mortgage
- The closing costs of the home refinance
- The amount of time you will have to remain in the home in order to recoup the cost of refinancing
One of the easiest way to determine whether the benefits of a home refinance would outweigh the costs is by using a home refinance calculator. By simply entering the necessary information you can receive valuable information such as how long you would need to remain in the home in order to recoup the costs tied to financing as well as the total cost savings over the life of the loan.