Refinancing Tips
Refinancing is a good option, but not for everyone. You can consider refinancing only if your current interest rate on mortgage is at least two percentage
points higher than the market rate. You also need to consider how long you plan to stay in the house. Most sources say that it takes at least three years to realize fully the savings from a lower interest rate.
Refinancing may be a great solution for you if you:
- Want to get out of a high interest rate loan to take advantage of lower rates.
- Intend to stay in the house long enough to make the additional fees worthwhile.
- Have an adjustable rate mortgage (ARM) and want a fixed-rate loan to have the certainty of knowing exactly what the mortgage payment will be for the life of the loan.
- Want to convert to an ARM with a lower interest rate or more protective features (better rate and payment caps) than the ARM they currently have.
- Want to build equity quicker by converting to a loan with a shorter term.
- Want to draw on the equity built up in their house to get cash for a major purchase or for their children's education.
More sources:
• Refinancing Page
• Refinance FAQ
• Mortgage Glossary
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