Home Refinance-Is Now the Right Time?
A home refinance is a situation where the homeowner has an existing loan on the property but is seeking to obtain a second mortgage to repay the original mortgage. This may sound like a waste of time but a home refinance can actually result in a significant cost savings for the homeowner over the course of the repayment period. This article will examine situations in which investigating a home refinance may be warranted and will provide advice on the importance of using a home refinance calculator.
When a Home Refinance is a Good Idea
Most people begin to consider a home refinance when there is a considerable drop in interest rates. This is because even a small change in the interest rate percentage can result in a substantial cost savings over the course of the loan period. However, before making the decision to undergo a home refinance the homeowner should carefully evaluate the situation to ensure the home refinance is a wise decision. Some of the factors to consider when deciding whether or not a home refinance is warranted include:
Importance of Mortgage Balance
- The decrease in interest rate on the home refinance
- The total potential savings resulting from the home refinance
- The amount of time the homeowner will have to remain in the home to recoup costs associated with refinancing
- The closing costs associated with the home refinance
- Loan application fees associated with the home refinance
Considering all of the above factors a home refinance is warranted when the overall savings generated by the refinance exceeds the costs associated with the home refinance such as closing costs and loan application fees and when the homeowner plans to remain in the home long enough to recoup the refinance costs.
Advantages of a Home Refinance Calculator
The previous section discussed the importance of ensuring a home refinance will result in an overall savings before beginning the application process to refinance the home. There are many complicated numbers involved in these equations and one of the easiest ways to make these decisions is to use a home refinance calculator. These calculators are readily available on the Internet. They prompt you for the required information and then provide you with valuable information such as the duration the homeowner should remain in the home to recoup the costs associated with financing and the total cost saving over the duration of the loan along with estimates for the necessary costs to complete the refinance.