Don't Wait to Refinance Your Mortgage!

A Home Buying Article Contributed by Cindy Mcnatt

Why Wait to Refinance Your Mortgage?

Do you agonize over your monthly mortgage payment? The time to refinance your existing mortgage is now, before rates go up! Interest rates are beginning to creep upward which is a signal that the lowest rates in history are about to be history.

Many Options to Refinance an Existing Mortgage

If you plan to stay in your home for 5 or more years, refinancing makes economic sense. Use a mortgage calculator to determine how long it will take to break even on your proposed refinancing loan. Input into the calculator the information required on your existing mortgage and the proposed new mortgage. In an instant you will see how long it will take to recover any fees associated with the new mortgage. Fees associated with refinancing can be minimized with the right lender.

Types of fees are "points" which usually equals 1% of the loan amount for each point charged to reduce the interest rate. Loan origination fees are normally 1% of the loan amount paid to the lender in addition to any points paid. Other fees may be appraisal fees, deed filing fees and sometimes an attorney's fee. However, not all lenders charge all fees, so it is best to shop around for the best refinancing options. Determine up front costs when you begin to r efinanceyourmortgage.

Beginyour search for refinancing with this short list of loan types:

*Cash out or home equity refinance

*Conventional fixed interest rate mortgage refinance at 30 years

*15 Year fixed interest rate and adjustable rate mortgages

*Zero down or no application fee loans

*Interest only loans - normally a short term loan with no interest which you can convert to a fixed or adjustable interest rate at the end of the term.

Cash out When Time to Refinance Your Mortgage?

Do you need extra cash for consolidation of your credit card debt? What about adding a room to your home or making other major improvements? When you refinance an existing mortgage, it's possible to obtain enough cash through your equity to do these things without raising your monthly payment. If you have lived in your home for 3-5 years, you may have built enough equity to obtain some cash to pay for needed expenses. Many people use their built up equity to pay off medical bills or credit cards.

Since mortgage interest is tax deductible, this may be a way to gain a better tax advantage while relieving your monthly debt load. When you are ready to refinance your mortgage, choose a lender that has expertise in this area of loans. Obtain several quotes from lenders and review interest rates, terms, and fees before signing a refinance agreement or loan paperwork. Over the life of a mortgage, you will save thousands of dollars as in this example:

Original mortgage amount - $100,000

Interest rate - 8%

Term: 30 years

Your Payment: 733.76 per month

Refinance mortgage amount with lower interest rate using same terms:

Loan amount - $100,000

Interest rate - 5.85%

Term: 30 years

Your Payment: $589.94

So it may be wise to refinance your mortgage now before the interest rates climb.