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Step 1
Refinancing a mortgage is generally a good idea if you can recoup the cost of the refinance within a year. If this will take more than a year, make sure you will be living in the home long enough to recover the costs of refinancing the mortgage.
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Step 2
Consider that several costs can go into refinancing a mortgage, such as closing costs which can include discount points, application, appraisal and legal fees and other charges. This can vary depending on your lender, but can run up to 6% of the total mortgage amount.
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Step 3
Figure out how refinancing your mortgage will affect your tax deductions. Lower interest payments mean you will have less interest to deduct, and may place you in a higher tax bracket. This is something to consider before refinancing a mortgage.
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Step 4
Be aware, that if you can manage it, refinancing a mortgage into a shorter term loan is one of the best ways to save money, as well as build equity in your home faster. The interest rates are usually lower, and you will pay less over the life of the loan.
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Step 5
Use a loan calculator to help you determine if refinancing a mortgage will benefit you. These can help you determine what your monthly payments will be and how much you will pay over the life of the loan. There are several of these available to use free online.
Comments
Marilynda said
on 4/9/2009 Good info to know if you are planning on refinancing your mortgage
dlcass said
on 2/18/2009 Great advice.
2besure said
on 2/17/2009 This is information you really need before you make that important decision to refiance! *****