The big news for the last year has been refinancing existing mortgages. If this is something that you are considering, it is not too late to “jump on the bandwagon”. There has been no better time in the last forty years to buy a home or refinance an existing one! Interest rates haven’t been this low since the early 60’s.
How do you decide if refinancing is right for you? Where do you find the best deals? The best way to get started is to gather as much information as possible about your current mortgage. The key things to know are:
- Your monthly Mortgage payment
- Total amount originally financed
- When your mortgage started
- Total number of years financed (many home loans are for thirty years)
- Name of organization holding the mortgage
- Information about any possible penalties for refinancing
- How long you plan to stay in your current house
Figure out how much you can afford to spend on your mortgage each month. This has probably changed from when you first purchased your home so you may be able to afford to pay more now. You may be asking, “I thought I was refinancing to save money. Why would I consider paying more?”
By paying just a few dollars more per month you may be able to cut five, ten or even more years from your mortgage. This will save you many thousands of dollars, over the life of your mortgage and build equity in your house much faster. Remember, the more equity you have, the more money you get to keep if you should sell. Another good thing about equity is that you are less tempted to spend it, so it is like a forced savings plan helping you reach you financial goals. Many people would simply waste an extra $10 or $50 or even $100 a month anyway so by adding it to your mortgage you can be thousands richer in a few years and not even miss the money.
To help you calculate whether refinancing is right for you we have provided a Refinancing Calculator by entering the numbers above into the calculator you can determine how long it will take you to “break even”. If you plan to stay in your current house longer than your “break even” point it will benefit you to refinance.
You should then compare mortgage rates.
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