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Four Things You Need To Know Before You Refinance Your House
By Charley Huang
The biggest decisions in life are the ones we think the most about and carefully consider the impact of our choices. If you are contemplating refinancing your home there are four things you need to consider: You need to think about what is your current mortgage rate and the payment amount. You need to think about what the new mortgage rate will be and your approximate costs and fees to refinance as well as how long you will be staying at your current residence.

1. By looking at your most recent monthly mortgage statement you can most often find your current mortgage rate, payment amount as well as the total amount outstanding on your mortgage loan. If you do not see this information, call your lender and get it. At a minimum, the outstanding principal balance should be listed on your statement.

2. Because mortgage interests vary almost hourly, you need to do your homework ahead of time



and research what the current mortgage rates are. Up-to-date mortgage rates can be found at www.interest.com or by checking with your local financial institutions. When you refinance you should really consider decreasing the repayment time of the loan. Even a small reduction in mortgage interest can generate enough causal effect and increased cash flow to help you make the same or slightly larger payment than what you were paying previously to reduce the length of the loan.

3. Know exactly what your refinancing cost will be. You should not have any surprises in this area or any other area. The refinancing costs vary from state to state and are dependent upon what outside entities such as appraisers or lawyers need to be involved in the details of your refinance along with your lender. Knowledge allows you to prepare as well as determine if you will be able to recoup the costs fast enough to justify refinancing.

4. Knowing the payback period is essential to determining if you will be in your home long enough to make refinancing a worthwhile investment. You need to be in the home long enough to recover the costs of the refinance at a minimum. Often this is not an easy decision even with the information of the length of the payback period. None of us are capable of knowing exactly what will happen in the future. This knowledge is simply significant so that we can make our best guess or estimate of what will happen based upon predictable factors as well as the probability of the unpredictable (such as a corporate relocation) happening within a certain period of time.

Knowledge and the application of the same determine the ultimate success of the house refinance. If this seems overwhelming, begin interviewing lenders who can discuss your specific needs and give you the answers and solutions you need.

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