Should you refinance your Mortgage?

Would you like to reduce your mortgage loan payment?  Mortgage rates have never been lower, at least not in my lifetime (and I remember seeing Dwight Eisenhower before he was president), so is it time to look into refinancing your mortgage?  It may behoove you to look into the possibility if you can reduce your monthly payment.

First, in order to reduce your payment amount, you can refinance to a lower interest rate.  Your mortgage payments are determined by the amount borrowed, interest rate and length of the loan, so lowering the interest rate, all other factors being the same, would naturally reduce the payment.  A reduction in even one percent can result in considerable savings.

You can also lengthen the term of your mortgage loan, which in effect stretches out lower payments over a longer period of time.  Although the total cost may be more in terms of interest paid, it still reduces the monthly amount, helping in tight situations where you can barely afford your current payments.

However, you must also factor in any cost of refinancing the loan, such as closing cost and appraisal fees.  Before my one and only refinancing I calculated how long it would take to recoup the additional cost, which turned out to be less than 2 years.  You may want to decide on the length of time it takes to recover from any additional cost based on the length of time you intend to stay in your home.

In addition, with the right amount of equity in your home, you can also find a deal through utilizing the worth of your home with a Home Equity Loan.  For a limited time, UKFCU is offering a special for such situations; click for more information.

If you reduce your monthly mortgage payment that may represent an opportunity to start paying off higher Interest rate loans as well as adding to your savings or retirement accounts.  Do the math to see if you would benefit from refinancing your home.

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