If you plan it right, refinancing a mortgage can be a wise financial move. Given the current economic downturn and the crises in the real estate market, many homeowners are unsure if they should refinance. Mortgage payments can be a hefty burden during a time when retirement portfolios have taken a hit and job insecurity is looming for some. A lot of consumers who bought their properties when real estate was at the peak are left holding the bag of decreased values now. Those who have adjustable rate mortgages are experiencing significant increases in their monthly payments, as their rates reset. You only have to do a brief search on the web to see the many advertisements for refinance mortgage information and help lines. Trying to make sense of what you should do personally can be quite a task.
Refinancing is an individual decision that depends on your financial situation. The savings that can be gained each month on mortgage payments is a common reason people refinance. Mortgage refinancing can be a financial win if the savings makes sense with the length of time you plan to own the house. First, determine how much you would save each month if you refinance. Second, estimate the cost of the appraisal, lawyer fees, documentation preparation and filing fees, charges from the new and old lenders, and any other refinancing costs. Third, divide the total cost of the refinancing by the estimated monthly savings. That will let you know when your "break even" point is, or how long it will take for you to actually start saving as a result of the refinance. Mortgage refinancing would not make sense, if you plan to sell the house before or on the break even point of the refinance. Mortgage owners that currently have adjustable rate mortgages are smart to explore refinancing, in spite of break even point calculations. Obtaining a steady fixed rate mortgage in the current rocky economy often outweighs the costs of a refinance. Mortgage owners often find it beneficial to merge debts from credit accounts or high rate loans with the refinance. Mortgage payments under a fixed rate mortgage may offer lower interest rates than those offered by the credit card company.
When deciding whether to refinance, mortgage holders should have a solid understanding of their current economic circumstances and monthly budget. Compare the costs and benefits of the refinance with the current monthly payments and how long you plan to own the property. Educate yourself on all the options and be aware of all the terms and rates set forth by any new mortgage you take on.
Article Source: the-Articles.com
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Author: marciafreeman
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