How To Tell When It Is A Good Time To Refinance

[Apr 16, 2008.]

With the economy fluctuating as much as it is today, every now and them it produces a time when it is a good idea to refinance your mortgage. You have heard of others making that change, and may have heard that some got a much better deal. Mortgages are different though, and so are people's circumstances. What may be right for one, may not be a good idea for someone else. Here are some tips that will help you to know when it is a good idea to refinance so you, too, can get that sweet deal.

The first thing that you need to do is to pull out your own mortgage, or mortgages, and look them over real good. See what kind of interest rate is has, as well as any other special terms that apply. If you bought your house with an adjustable rate mortgage, as many did, a few years back, then you also want to be sure to note when it changes from a fixed rate mortgage to the adjustable rate portion. For many of you, it could be getting real close, if that time has not already occurred. Refinancing could give you a stable payment and a new interest rate, too.

You also want to notice the current interest rates, so you can compare what you have with what is taking place in the housing market. Generally, you want at least one-percent difference between what you have and what is available. This is enough to allow for savings over a few years.

Another thing that you need to seriously consider is whether or not you are planning on staying in that house for a while to come - like years to come. This factor, along with the other is probably most important. Mortgage refinance means having to pay a number of fees again, including closing costs, etc. The actual cost will take a couple of years to start recovering from the expense of refinancing. So, it actually would not be worth it if you are thinking of moving in a couple of years.

One more option that may make it more appealing to you is the possibility of getting financing to do some project around the house. It could give you the opportunity to remodel, add a room, redecorate, or even buy new furniture, or even a boat. If you have equity in the house, which you probably do have some by now, it makes it even easier to refinance. If this is a second mortgage, you have the possibility of getting either a home equity loan, or a home equity line of credit (HELOC).

A home equity loan gives you a loan for the equity that you have built up in your home. The other way to go is with a HELOC. This convenient loan gives you a line of credit where you can use the money as you see fit for whatever you want. The good news is that you are actually only borrowing, or paying interest on the amount of money you actually spend. So, this gives you an opportunity to have available cash, but not paying the full amount of interest if you never use a portion of it.

Refinancing is something that goes on all the time. In this mobile society we call America, the average homeowner is refinancing about every five years, or so. So, if you have an ARM that is ready to go to an adjustable rate, it could be a very good idea to get a stable rate of interest now, before the economy and interests rates suddenly rise again.