Are You Struggling with the Dilemma of Refinancing

With interest rates at near historic lows many people are wondering about the option of refinancing their homes. There are many ways of refinancing your home, and several ways to consider going about this process. However, fefinancing may not be for everyone. There are several reasons to consider refinancing a home as well as several reasons not to consider this consumer option.

Reasons to Consider a Home Refinance

+The first reason to refinance are as previously mentioned the historically low interest rates. Many who lower their interest rate on the amount borrowed on the mortgage, can substantially lower their interest rate on the mortgage. This will allow the borrower to keep more money in their pocket every month, and naturally most borrowers think this is a good idea.

+One can also change their loan offering, some people have opted to switch their loan from an Adjustable Rate Mortgages to a fixed interest rate. Fixed Rate Mortgages are generally a better bet in the long term as the interest rates remain steady over time. Investigate all options before deciding on a refinance option.

+ Another great reason to consider a home refinance is if your money or credit situation has changed over the past several years. For instance the borrowers income or credit may have improved over the years they have held the mortgage.. You, the borrower may be able to switch payment plans from a 30 year mortgage to a 15 year mortgage plan. The borrower can also opt to add bimonthly rather than monthly payments to build equity faster in the home

+Different types of refiance options exist.You may be able to use extra equity in the home to pay for a child’s college education for instance, or to take a dream vacation. A homeowner may be able to take advantage of a cash out refinance in order to take advantage of this option. This may be a viable option as well as a no cost refinance, however, borrowers using this option will end up paying a higher interest rate.

Reasons not to do a Refinance

+ Those who are planning o stay in the home for less than 5 years may not wish to do a refinance option. There are a number of fees typically associated with refinancing and if one is only going to be in the home a short period of time the costs associated with refinancing may not be worth it.

+ Those who have been in the home for more than ten years may not benefit from refinancing. Over time the principal gets paid down on an older mortgage so it may not be worth the cost of refinancing. it is usually counterproductive to refinance a mortgage a homeowner has had for a substantial period of time.

+Credit issues, if you are experiencing problems with your credit, refinancing may not be an option. You the borrower, may not be able to get an interest rate that can make the refinance worthwhile. For those who are considering a refinance investigate all the options, do the math and see if it makes sense in your particular case.