A lot of people hear all types of stories about refinancing, some good and some bad. The bottom line is though, if you are vigilant and do some work, refinancing your home or condo mortgage can be a great thing. A proper refinance would have leave you with either a lump sum of cash from the equity you have been building in your house. Or, you could lower your monthly payments, while still owning the same property.

Often times, your first mortgage is a learning experience. You find out later how much this learning experience will cost you. You usually did not have the credit or cash flow you have now (assuming a few years of home ownership). When you got your first mortgage loan you probably figured it was a few points higher then the “regular” interest rate you have seen advertised. Today however, those 2 or 3 percentage points are likely to be all you need to be on the road to a successful mortgage refinance. The rule of thumb is that the refinanced loan rate should be 2-3% lower than your current mortgage rate. This will be enough of a savings that you will be able to either walk out of the refinancing with cash in hand (after all it is your cash that has been tied up in the increasing value of your home) or a lower monthly payment due to the new mortgage loan rate being a few percentage points lower than the mortgage loan rate you got out of. The second option I mentioned, the lower monthly payments, is basically starting again with a new mortgage, and using your improved credit score and cash flow you will be in for some savings every month on your mortgage. Make sure you are ready for mortgage refinancing by reading and doing as much research as possible. The mortgage lender wont be bending backwards to help you save money (and him lose more) you are on your own. The best you can do is be knowledgeable about mortgage and condo refinancing.

-M Petrone


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