Thinking of Refinancing Your Mortgage: Ask Yourself Why

A Home Buying Article Contributed by Robert Scalia

When It Comes to Refinancing Your Mortgage, There are No Easy Answers

When it comes to refinancing your mortgage, there are no easy answers. There are only intelligent questions. Take the time to ask yourself these very questions before you decide to make that leap of faith.

Quizzing Yourself When It Comes to Refinancing Your Mortgage?

If you are thinking of refinancing your mortgage, then you need to ask yourself some serious questions.

A good place to start is to ask yourself how long you plan to live in your home. This is an important one because all other decisions will rest on this one. It will help you figure out whether a fixed rate mortgage or a variable one would be better to help you pay points to lower your rate.

What are the costs associated with taking out this loan? Every loan applicant is entitles to a federally mandated document called the Good Faith Estimate of Closing Costs. Take note of the estimated cash at closing clause. That's the key.

So just how long will it take to break even? When refinancing a mortgage, you need to ask yourself this very question as you ponder how ling it will take to recoup the closing costs from the monthly payments?

People need to ask themselves: What makes me feel comfortable? Some people prefer paying zero discount points. Others prefer taking out a 15 or 30-year mortgage. And others still see it fit to go about refinancing their mortgage only once with the hope of never having to do it again.

How long should I lock my interest rate for? Bear in mind that the sheer number of people refinancing their mortgage means lenders and other mortgage service providers like appraisers and title companies are actually very busy individuals. Be patient.

You also need to ask yourself how you'll be able to make the payments for your new mortgage after he tally up all the other monthly mortgage expenses? The answer might be crucial to your decision. Keep in mind that principal and interest, although important, can overshadow the other items in the monthly payment: things like private mortgage insurance and regular home maintenance fees.

These are items that add up. When it comes to refinancing your mortgage, however, the trick is to always consider the worst case scenario. So when it comes to the interest rate, you might want to ask yourself: Is my credit good enough to get that attractive rate I want? One thing's for sure: You won't be getting the advertised rate if your credit is anything other than stellar Your credit should be no less than perfect of you're hoping to avoid scrutiny and succeed in refinancing your mortgage.

If I Can Answer All These Questions Favorably, is Refinancing My Mortgage a Done Deal?

Yes, but just make it a point to remember that simply getting through the questions automatically guarantees that refinancing your mortgage will go off without a hitch. That might just be wishful thinking.