Is It An Appropriate Time To Refinance?|
by Kathy Bakeferd
Have you heard that interest rates are at the ~lowest
point~? Do you think this is a sign that this is the
moment to refinance your present mortgage? Yes, may be you
are right but do not take any decision until you consider
First off, you must find out what the current interest
rate on your mortgage is. Then, make a comparison between
that rate and the one you might be offered in case you
should opt to refinance. If the current interest on your
mortgage is not at least one and a half or two percentage
points higher than the present market rate, then,
refinancing won~t be an excellent opportunity for you.
Besides, in a refinance you~ll face closing costs that
might include an appraisal and fees meant to pay off your
existent loan in advance. In case your new interest rate
should be hardly better, a long time will pass before you
had paid the amount of your new loan.
What else do you have to consider before refinancing your
loan? Well, your future plans. If your plans are staying
in the house about another year, you will almost certainly
not going to be at an advantage with a new loan. And, for
instance, you are not expected to get back the cost of
closing a new loan, if you think that your job will
require a move or you want to put your house up for sale
in a little while for the equity you~ve accumulated.
Does this mean that there~s never a time when refinancing
is a good option? Not at all. In fact, there are some times
when a refinance loan is an excellent financial move.
Maybe you took out your original loan when your credit
score was low and the only way you could get a loan was to
accept a high interest rate. That~s sometimes the case with
first time buyers, but you might have increased your
credit score if you~ve made regular payments for a couple
of years. In that case, it could very well be time to
refinance. You could get a much better rate and find
yourself building equity much more quickly than with your
It can also be that you had requested a loan at a time
when credit and market conditions were adverse, and now it
is a burden for your financial position. If your current
loan has an adjustable interest rate, you~d appreciate
having a fixed-rate mortgage in order to check what the
mortgage payments will be every month. In these last cases
refinancing could certainly be advisable.
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