How to Decide if You Should Refinance Your Home

Refinancing your home may or may not be a good financial decision for you. Here's how to know if refinancing your home is right for you.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

• home
• mortgage
• bank

1. A good rule of thumb to follow is that anyone who plans on selling the home in the next couple of years should probably not consider refinancing because of the fees involved. It may take a couple years for the savings to actually happen for you.

2. If the current mortgage rate is below your rate, this may be the right decision for you. However, if the rate is not at least one point below what your current rate is, this may not be for you because there are fees to refinance and it may not make financial sense at this time.

3. If you have an adjustable rate mortgage, when the interest rates are low, you may want to consider refinancing to get a stable rate and avoid those fluctuating rates that can really cost you a lot of money.

4. If you are looking to do a project around the home and need the money for it, refinancing your home may be a good option for you. Talk to your mortgage broker about this option since there may be other options and bank loans better suited to your financial needs with better interest rates or lower fees.

5. After all of this, it is still always a good idea to talk to your mortgage broker about what is the best plan for you. Remember, not every mortgage is the same so just because a refinancing opportunity is right for your friend, it may not always be right for you even if the interest rate is lower than what you are currently paying.

6. Probably the most important advice anyone can give you is to beware of any financial institution including your favorite bank offering you a deal that sounds too good to be true. It probably is and can cost you a lot of money or worse, your home. With the rate of foreclosures, one must always be suspicious of those types of too good to be true deals.

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[toogie2]

on 5/13/2009 Good advice. (Especially Step 6 - if it sounds too good to be true it probably is!)

[GreenGardenChic]

on 4/7/2009 Perfect advice.

[HouseWifeMafia]

on 3/31/2009 Well written! Those mortgages can be tricky.