Mortgage refinancing can provide a number of benefits to homeowners; however, it should only be undertaken when it makes financial sense. Unfortunately, many homeowners make the mistake of believing that a lower interest rate makes it the best time to refinance their home. This is not necessarily true; however. Other factors should be taken into consideration as well.
When Mortgage Refinancing Makes Sense
One of the factors that should be taken into consideration is whether all of the terms of the new mortgage are favorable. Remember it is important to look at not only the monthly payment savings but also the interest rate, total cost savings and how long you must stay in the home in order to recoup the costs associated with the refinance.
Before you make a decision regarding refinancing it is important to carefully examine your financial situation as well as your long term goals. This can make it much easier to determine whether now is the right time for you to refinance your mortgage. If you have a large balance remaining on your existing mortgage, for example; you may be able to benefit from significantly lowering your interest rate as well as creating a larger cash flow each month. This type of situation would allow you to stretch your payments out over a longer period of time as well as take advantage of lower interest rates, both of
The Advantages of Mortgage Refinancing
Other potential benefits of mortgage refinancing include the following:
- Consolidating high interest debt
- Obtaining lower interest rats that result in overall cost savings