Home equity loans, learning the basics
Mortgage refinancing may cost money in the short run, but in the long run it can save you tens of thousands of dollars. When should you refinance your mortgage? As of May 2009, interest rates are at a record low, but is that alone a good reason to refinance? First, will you be able to get a new mortgage with interest rates at least two points lower than the interest rate on your current mortgage? It is good financial sense to refinance only when mortgage refinancing would save you more in interest payments than you would spend on mortgage fees. A two percent drop in interest rates will offset the mortgage fees for most, though not all, homeowners. Second, how long do you plan to stay in the house? If you will be living in the house for years to come or you plan to own it long term as a rental property, then mortgage refinancing makes sense. On the other hand, if you are leaving in only a few years, then it does not make sense to refinance unless you know when you are leaving and you need lower mortgage payments between now and then.