Mortgage refinancing can be a great option for many people. However, this is not true for everyone. There are both positives and negatives to consider prior to refinancing a mortgage. Here are 3 things that you should think about prior to attempting to refinance a mortgage.

Save Money through Refinancing a Mortgage:
The main reason people refinance their home loans is to decrease the interest rates. By reducing the amount of interest you pay, you will be truly saving money. However, sometimes homeowners can not get good enough interest rate, pay closing costs, and still benefit. Typically, if a homeowner can save 1%-2% in interest, they will be able to really see a benefit to mortgage refinancing.

Cash Out Mortgage Refinancing to Reduce Other Debts:
A cash out mortgage refinancing option can be a great way for a homeowner to pay off, or down, other debts. When you get cash back from a refinance, you will receive it in a lump sum. This money should be spent wisely though, and you should have a plan for it. Also, this money can help with retirement planning, home improvements, or anything you want. However, spend it wisely and with the long run in mind.

Fixed Rate Mortgages:
Many homeowners are attracted to ARM (Adjusted rate mortgages) because of their low initial interest rates. However, if the rate does rise, so will your mortgage payments every month. That is why a fixed rate mortgage is usually suggested to homeowners. With a fixed mortgage, your interest rate, and monthly payments, stay the same regardless of market conditions.

These are 3 good reasons to refinance a mortgage.

-M Petrone

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