Refinancing a mortgage can be a great thing for many homeowners. However, there are some things a homeowner must consider prior to making their decision. Here are some questions a homeowner should ask themselves before refinancing their mortgage.

1)Why are you refinancing?
Do you want lower monthly mortgage payments? Want to take advantage of an increased credit rating, or low interest rates? Want to get out of your ARM loan and into a stable, fixed rate mortgage. These are all questions which will help you get the refinance package you need. Always make sure to have your long term goals in mind.

2)How long are you planning on living in your home?
If you are not planning on living in your home for more than a few years, refinancing may not be the proper decision at all. However, this is just a general statement. Some homeowners who are planning on selling their home can benefit from an ARM loan. Sometimes an ARM loan comes with very low interest rates for a certain period of time. This type of ARM loan can guarantee your rates will not increase for a certain amount of time. If you can get a loan like this, and are moving or selling your home soon, you can benefit from the low interest rates that often come with an ARM loan.

3)What will the total costs be when I refinance my mortgage?
Sometimes, homeowners refinancing are only going to save a little bit of money. While every little bit helps, oftentimes a refinancing can be a bad thing because the homeowner did not take all closing costs and fees into account. Homeowners need to know their “break even” date. This is when you will overcome the expenses of refinancing and actually start saving money every month.

Home loan refinance can truly help many homeowners. However, these are a few simple questions that need to be asked prior to agreeing to anything. Always make sure you have done all your homework and research, and know the answers to these questions.

-M Petrone

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