Benefits of Refinancing Your Mortgage

Have you considered refinancing your mortgage loan or obtaining new financing? With current mortgage rates at their lowest in over 50 years, it makes sense to determine if you will really benefit from refinancing your mortgage.

Before you consider refinancing your mortgage loan or obtaining new financing, make sure you understand the mortgage options. The type of mortgage loan, the interest rate, points and other charges and fees paid to lender may vary with the loan amount and the property value in addition to your credit rating, type of house, your ability to document income and assets, etc.

If you currently have a higher interest rate mortgage loan, credit card debt, medical expenses, home improvement and repair bills, education or student loans, these expenses can impact virtually every other aspect of your financial situation. With interest rates this low, maybe you can consolidate and restructure your debt. You could then accelerate your principal payments to pay off your debt early; or you can decide what you want to do with the savings. Perhaps you may want to redirect the savings to your retirement accounts.

Whether refinancing your mortgage could lower your monthly payments and downsize your interest expense depends largely on your personal circumstances. Since prices vary depending on the property and transaction characteristics that lenders believe affect their risk and cost, the process begins by completing a Uniform Residential Loan Application. To avoid paying unnecessary fees, analyze and review all charges along with the interest rates and points. Points are an upfront charge expressed as a percent of the loan amount. An origination fee is the same except it is not related to the interest rate as points are.

You owe it to yourself to keep as much of your hard earned money as possible. So take time to review your mortgage financing periodically. Mortgage financing can impact virtually every aspect of your financial situation. Decisions regarding personal real estate and mortgage options can have direct implications on cash flow, risk management, asset accumulation, retirement and legacy planning.