Is your knowledge of refinancing just enough to be cautious? It is understandable to be cautious when thinking of refinancing it can either help your situation or make it a lot worse if you don’t have the proper knowledge of the process. Don’t make a bad decision when refinancing it can end up costing you hundreds of dollars it is done incorrectly. 

There is huge number of people thinking of refinancing their current mortgages. Refinancing is a great tool to utilize when trying to lower your monthly payments and save some money in the process. Throughout this article refinancing will be discussed.

Knowing when to refinance is difficult to know for certain. Nowadays loans have an interest rate of about 6%. Anyone with a high interest loan now is a good time to research refinancing because the rates have dropped significantly. There is opportunity now to refinance and save some money.  

When to Refinance

Back in the 1980s the rule was to refinance only when your mortgage rate can drop by at least 2 percentage points. However, these days you should refinance whenever you find a lower interest rate than your current loan.

The interest rates are lower now than back in the 1980s. If you were to refinance from 7% to 6% it would be equivalent to refinancing from 14% to 12% back then. Also the cost of getting the loan has also dropped. Make sure to look into the amount of time it will take to recover any expenses of refinancing; the cost should not outweigh the savings.

You should also keep an eye out for low interest rate offers, there are advertisements everywhere. Investigate the possibility of refinancing whenever you notice low rates. Rates can fall and rise from one day to another so it is recommended to request loan quotes whenever you notice low rates.

Knowing when to refinance can be difficult to determine but worth the effort when done correctly and at the tight time. Refinancing when interest rates are low is the most important step but the bad thing is that no one is ever sure of when the rates are going to drop, be at the lowest or when the rates will rise. Be careful and don’t rush into anything that you feel uncertain with. Remember that refinancing is supposed to save you money not cost you any more.

-M Petrone

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