Knowing when to refinance your second mortgage is a difficult decision. Prior to making the decision to refinance make sure that you will benefit from refinancing. Either you should be saving a few hundred dollars a month from lower interest rates or you should be switching from an adjustable rate to a lower fixed one.

Lower Rates = Savings
Refinancing to a new mortgage with a lower rate than your current loan can save hundreds of dollars a month. To make sure that you are saving money and not wasting it you should compare your current home loan with a potential new loan. Knowing when to refinance is important so always be aware of what is going on and check for lower rates whenever you can. By combining you first and second mortgages you can reduce any possible fees and high rates, but it may only work if the first mortgage loan comes with a high interest rate.

Rising Rates - Protect Yourself
Although refinancing will lower your interest rate there is still a possibility of the rate increasing. However if your second mortgage has an adjustable rate it can protect you from the possibility of increasing interest rates. Although there may be caps put in place you loans length could be extended and as a result the total increases. It is possible to find a fixed rate that is lower than an adjustable rate. With a fixed rate you can rest easy knowing your payments will not increase from one month to another.

Refinancing - Timing Is Important
Most times with home equity loans the majority of the interest is paid at the beginning of the pay period. What this means is that by the half way point of your loan you will be paying less interest and more on the principle of the loan. In order to save the most possible it is best to refinance early. Knowing when to refinance can be difficult to decide but is well worth the possible savings every month.  

Although refinancing is a good move it is best to hold off if you plan on moving soon. It can take a couple of years to recoup the cost of refinancing. Refinancing before you move can end up costing you money instead of saving you some. Look into the possibility of refinancing and see if it will work for your situation. It can be the answer that you have been looking for this whole time.

-M Petrone

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