During this article we will be discussing home refinancing. Currently during this tough economic time this is a very popular subject. Although the interest rates are not at their lowest, there are many people considering refinancing. The process of refinancing a home can be complicated and confusing so there is no reason to be embarrassed if you need some kind of explanation.

There are many people that were buying their first home who took the first option that they were given. Many people are having financial difficulties and are unable to get a good loan. As soon they got into their home they were happy with their lender however after a few months of paying the loan they begin to think that they could have gotten a better deal. It could be because you are now better off and feel that you can get better terms on the loan. Whatever the reason may be you should consider a few things before deciding to pursue a mortgage refinancing loan or loan modification.

When you refinance your home it means that you are taking out another loan to repay the current loan. If you have had your current loan for some time, you have already paid a good chuck of it and will not owe as much. If you are refinancing a loan that you have had for a while you wont need to take out a loan that is very big and your new payments will be smaller.

The first thing that you must consider is the interest rate on the loan. In order to be worth the time and effort the new loan should have an interest rate of at least 2% lower than your current rate. This would be the big deciding factor to refinance a mortgage loan unless the reason you want to refinance due to a soon to be skyrocketing payment.

You should also double check your current mortgage documents to make sure that you are not being charged prepayment fees. However if you do have these fees, consider the total cost that will come along with the loan, be aware that all loans do come with closing fees. When you see a home mortgage lender advertise themselves as having no closing cost what they are doing is just rolling over into your actual loan and in the end the loan will be higher because of it. Another way lenders trick you is having low interest rates but with high closing costs. If this is done it may take a few years to make refinancing worthwhile.

-M Petrone

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