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When You Should/Shouldn’t Refinance Your Mortgage: 5 Considerations

Because of the continued period of historically low, interest rates, a record number of Americans, have decided, it may be the ideal time, to consider refinancing their existing mortgage, in order to take advantage of these conditions. Since one’s home, for most people, is their single, largest financial asset, doesn’t it make sense, than any step taken, should be well – considered, etc? This article will attempt to briefly review and examine, 5 considerations, regarding whether one should, or shouldn’t refinance their home mortgage.

1. Run the numbers clearly and thoroughly: Be carefully to avoid proceeding hastily, or without thoroughly examining, whether it makes sense, for you! Examine all relevant factors, including costs associated with refinancing, how long, and how much remains on your existing mortgage (as well as its interest rate), closing costs, term of the new document, etc. How long might it take you to recoup the costs of refinancing?

2. How long do you plan to live in your existing home?: Be certain you plan, to live, where you do, long enough, for taking this step? Depending upon that period, your decision might vary! Also, the length of time, you plan to stay, will help you decide, the best type of mortgage, to seek, and go after!

3. Home value: Has your home’s value substantially increased, since you first, financed it? Does it make sense, to take advantage of that, and, if you qualify, seek a larger mortgage, to generate disposable funds, etc?

4. Your quality of credit: How good is your credit, and how much might you qualify for, based on the combination of your credit worthiness, income, existing other debt, and the enhanced value of your house? Will you feel comfortable, with additional debt, or, prefer, to have far less? Since our tax code, still, provides preferential tax treatment, to home mortgage interest, be certain you include that factor, in your determination!

5. Hassle/ time/ focus/ reasoning: Any time, one refinances, there is a degree of hassle, and disturbing one’s comfort zone! In addition, the process requires a considerable amount of time, effort and resources, including gathering all the necessary documents/ paperwork, and other requirements, underwriters seek! Is your focus and emphasis, practical and realistic, and does, proceeding with refinancing, make sense, for you? Examine your reasoning, and determine, what might be the best course of action!

For many homeowners, refinancing is both wise and prudent. However, it doesn’t always make sense for everyone. Before you proceed, examine your personal situation, and decide, what’s best for you!

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