There are several questions you should ask yourself when considering a home mortgage refinance. First of all you need to access your credit situation. If credit has been a problem for you in the past, you will want to take control of your finances before applying for a mortgage refinance loan. Refinancing can either help or hinder your current situation.
You will need to calculate all of the costs involved in refinancing before making a decision. A lower rate of interest and a shorter loan payoff time are two desirable perks of refinancing. Some people are only interested in lowering their monthly payment amount. However, you will need to remain in your home long enough to reap the benefits of refinancing. It makes no sense at all to refinance your home if you plan on moving within a few years. It is a good idea to figure how long it will take to recover the costs of refinancing. Some loans may offer a lower rate of interest but have excessive closing costs and fees. You will want to be aware of all costs involved including any additional income taxes you may be charged.
The Two Percent Rule
The two percent rule refers to your existing mortgage rate compared to current rates of interest. Many lenders recommend that you refinance if you can obtain an interest rate two percent less than your current rate. This is just a general rule and should not be the only deciding factor. Often the time you intend to remain in the home is just as important as the lower rate of interest.
On average the costs of refinancing will be at least three percent of your mortgage loan. This is a lot of money to spend and you will want to make sure you will be able to recover these costs when refinancing. If you are making payments on your first home and plan on buying a larger home in the future, a drop in the current interest rates may be the perfect time to purchase a new home. If you can obtain more home space for about the same price, this may be a desirable option.
Related Articles
Bad Credit Mortgage Refinancing - Refinance High Interest Mortgage With Poor Credit
By: Jas | 19/03/2008 | Finance
With bad credit, you can't afford not to refinance a high interest mortgage. Working with the right lender, you can trim your loan costs and help your monthly budget.
California Refinance - Refinancing in California
By: Jas | 19/03/2008 | Finance
The real estate market in California is booming. Home values continue to appreciate almost on a daily basis. Refinancing your home is an excellent way to take advantage of the low interest rates currently being offered by California lenders.
Credit Report Scores - Why it is Important for Your Finances
By: Jas | 19/03/2008 | Finance
The airwaves these days seem to be full of advertisements for consumers to obtain their credit reports and also apply for credit cards. Apart from encouraging consumers to obtain their credit reports, consumers are not told and do not fully understand why it is that important.
Family Finance Beyond Rrsps
By: Jas | 19/03/2008 | Finance
Congratulations, you have contributed the maximum amount to your RRSP. So now what?
Florida Refinance - Refinancing in Florida
By: Jas | 20/03/2008 | Finance
The decision to buy a home in Florida can be one of the best you will ever make. If you own a home in Florida you may be considering refinancing. Refinancing now can potentially save you thousands of dollars over the length of your mortgage. Florida lenders are offering low interest rates and could save you thousands of dollars over the length of your loan.
Bad Credit Refinance 101: the Hows and the Whats
By: Jas | 19/03/2008 | Finance
If you are like every other home owner or general consumer out there, you need to pay for your expenses somehow. If you have bad credit, you might be limited in your options as to what you can do (or so you think…keep reading!).
Can You Afford not to Look After Your Personal Finances?
By: Jas | 19/03/2008 | Finance
Investing is a subject a lot of people don’t want to think about. And there is good reason for that. Investing seems scary. It either sounds like something only the rich do or something that only a skilled professional can do. But the truth is that investing is something that everyone can and should do—as soon as possible.
Debt Consolidation Refinance Loans - a Great Way to Lower Your Bills
By: Jas | 19/03/2008 | Finance
For millions of homeowners, refinancing is the perfect way to consolidate debts. You can consolidate your debts, eliminate outrageous interest rates and fees, and make one low monthly payment.
Got a Question? Ask.
Ask the community a question about this article:
Frequently Asked Questions
Got a question about Personal Finance? Type your ...
By: heartfan8 | 21-08-2008
Got a question about Personal Finance? Type your question here...
trying to contact beth pinsker, editor....pinsker was my mother's maiden name.
Can i get a new car with bad credit and nojob ...
By: diamondgrl70 | 20-08-2008
can i get a new car with bad credit and nojob?qt=q
I have very bad creidt in need of a 5000 dollar ...
By: JSweet30 | 20-08-2008
i have very bad creidt in need of a 5000 dollar loan asap where can i apply
Drowning in debt
By: montanero | 20-08-2008
I owe about 65.000 in credit cards I own a small gift & flower shop last 3 to 4 months is really bad now I have problems to pay my cards even the minimum interest went all the way to 28% I don't have real state properties it seems like I have to make a choice consolidation debt settlement or bankruptcy what will be the best choice thanks
I worked from 1959 till 1963 in augsburg germany ...
By: happy | 20-08-2008
i worked from 1959 till 1963 in augsburg germany at modehaus fischer as a salesgirl
how much retirement do i get if i retire by the age of 65 i now live in new york
Do you have any auto loans I can get, with bad ...
By: peter | 20-08-2008
Do you have any auto loans I can get, with bad credit without a co-signer? Please answer right away. Thank you.
Q&A Powered by:
More from Jas
Foster Home Uses Pay Option Mortgage Loan for California Refinance
By: Jas | 20/03/2008 | Finance
“We recently received an application from Angela P. who needed to refinance her California home. While finding out her specific goals for the refinance I learned that she was a foster mom and cared for multiple "crack" babies that had been taken away from their mothers at birth because of testing positive for an illegal substance during labor.
Florida Refinance - Refinancing in Florida
By: Jas | 20/03/2008 | Finance
The decision to buy a home in Florida can be one of the best you will ever make. If you own a home in Florida you may be considering refinancing. Refinancing now can potentially save you thousands of dollars over the length of your mortgage. Florida lenders are offering low interest rates and could save you thousands of dollars over the length of your loan.
Five Tips to Slash Your Home Finance Costs
By: Jas | 20/03/2008 | Finance
It's no wonder that the majority of homeowners dream of one day being able to pay off their home loan and live a life free from the shackles of interest rates, home finance and worries about meeting the monthly mortgage payments because the largest expense the majority of us take on in a lifetime is our mortgage and each month our home finance payments take a substantial chunk out of our take home pay.
Finding the Right Time to Refinance a Loan
By: Jas | 20/03/2008 | Finance
If you've been thinking about refinancing a loan, you might wonder whether or not right now is the best time to do so.
Finding the Best Mortgage Refinance Rate
By: Jas | 20/03/2008 | Finance
You may have become used to the monthly house payment that you make. But for many of us refinancing our homes is a great way to save money, lower the house payment, and unlock some of the equity already built change such as refinancing in the house.
Finding a Mortgage Refinance Advisor
By: Jas | 20/03/2008 | Finance
If you are looking to refinance your home for a lower rate, or you are interested in a refinance with cash out to do some home repairs, buy a new car, etc., you may want to consider finding a mortgage refinance advisor.
Finances for the Freelancer
By: Jas | 20/03/2008 | Finance
Budgeting and financial planning are great ideas, but how in the world do you budget or plan when you don't know from one month to the next how much money you're going to earn? You have months at a time when you earn very little money, and then during the prosperous months you're busy playing financial catch-up - and then comes another tough time.
Finance Your Small Business: so Much Money – so Little Time
By: Jas | 20/03/2008 | Finance
$47.4 million venture capital funded projects today. $86.4 million yesterday. $51.4 million the day before.
Finance 
