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Step 1
You can get a lower interest rate. The general rule of thumb is that a new mortgage rate should be 1-2 percentage points below your current rate. Many banks and finance companies offer free refinancing programs.
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Step 2
Build equity in your home faster. Many home owners prefer to pay off their mortgage sooner by refinancing the loan over a shorter term. For example, if you have a 30 year mortgage, you may want to refinance and switch to a 15 year mortgage.
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Step 3
Refinancing may help you draw cash on your home’s equity. You can access your home equity to provide cash for large expenses such as home improvements, college expenses, or to pay off other debt with higher rates.
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Step 4
Refinancing your mortgage can save you money over the life of the loan. You may have to pay up front for these savings. Educate yourself on fees associated with the refinance. Common fees for mortgage refinancing fees include points, closing costs, appraisals, and title transfers. With the slow economy, many banks are offering special refinancing deals waiving these fees. Just be sure to do your homework so you don’t tack on extra costs.
Comments
Wasatch said
on 1/29/2009 Good article. You need to weigh cost of refi with how long before you may move. 5*
Susang6 said
on 1/28/2009 You are absolutely correct, refinancing can definitely save you money, and if you use that extra money! great article with many useful tips 5*
mark1967 said
on 1/15/2009 great idea, if i could only get my house back now.
NightowlMama said
on 1/14/2009 we were just talking about this interest rates are 4.25 percent.
rewrite810 said
on 1/11/2009 Informative article -- thanks for the advice!