Is Refinancing Right For You?

Refinancing is a solution to lowering your monthly payments, changing your loan from adjustable to fixed rate, and taking cash out of your home's equity. It is also an easy way to tap into home equity to pay off high interest credit cards and other bills. This is precisely why refinancing has become so common.

While all this seems dandy, mortgage refinancing can certainly be an intimidating process for any homeowner. First, you need to decide whether refinancing is right for you. A refinance mortgage rate comparison can give you an idea of some of the possibilities for your personal situation.

Check Your Qualifications
One thing that effects mortgage refinancing is the borrower's loan qualifications and credit line. FHA streamline refinancing is the easiest type of refinancing possible. Rate and term refinancing is when you refinance your existing loan balance and closing costs where available to obtain a better rate or loan term. Still, refinancing is not always about saving. That's because mortgage refinancing is simply taking out a new mortgage.

Refinance Mortgage Rate Comparison A refinance mortgage rate comparison can give you an idea of the possibilities for your personal situation. There is no tax on such an "excess mortgage" at the time of refinancing. When mortgage interest rates fluctuate or when people decide they'll be in a home longer than expected, this is the time to consider refinancing a mortgage. The best thing you can do is to compare interest rates, closing costs, fees and terms of several mortgage refinancing.

Interest-Only Loans
Interest-only loans are quickly becoming a mainstream loan product. Interest-only loans usually have a term of 1-5 years. Be very careful with ARMs or interest-only loans as they can turn around and bite you if you aren't careful. Interest-only loans do not pay down the principal of your mortgage but simply the interest. If your thinking about getting involved with an interest-only loan then be sure to talk to a banking professional about the pitfalls first.

Make Sure You Run All The Numbers
Many homeowners mistakenly assume that by choosing the loan with the lowest interest rate they will save money when mortgage refinancing. This is not always the case.

Adverse Credit Remortgage
If you have a poor credit history, there are firms that offer an "adverse credit remortgage" but they usually charge higher interest rates and for the most part you are really looking to refinance when interest rates drop. Remember that the limit to refinancing is having a mortgage interest rate that is at least ½ of a percent lower than your existing mortgage.

John Morroni is