| When you have a mortgage, it means that you have a | | | | in your mortgage interest. The impact in total of a |
| home that you own, even if you are still paying for it. | | | | reduced rate or refinanced mortgage is going to |
| Therefore, the money that you have paid into your | | | | depend on the tax bracket that you are in, your |
| home loan is money that you are often able to | | | | income, and the other deductions that you might have. |
| access. Refinancing a loan means taking a look at the | | | | Questions to Ask Yourself |
| money that you have put into it, and finding a better | | | | In order to get a better deal with your refinanced |
| deal including the money that you have already spent, | | | | mortgage, there are going to be several questions that |
| so that you have a smaller loan with lower | | | | you need to ask to insure you are going to be taking |
| repayments. For some people, refinancing also means | | | | the right steps. |
| that you are taking a look at the money you have | | | | Figure out how long you are going to be staying in |
| already put into the house, and perhaps getting some | | | | your current home. If you feel like you are going to live |
| of that money back. | | | | there for 3 years or less, chances are that you won't |
| Why Refinance? | | | | be able to recover the costs of refinancing before you |
| Many people look at refinancing their home loans | | | | have to move. This can be done by looking at the |
| because it means that they can get a home loan at a | | | | costs of closing on the new mortgage as compared |
| lower interest rate, and that they will be able to reduce | | | | to the savings that you are getting by refinancing. If |
| their monthly mortgage payment. It can allow them to | | | | your savings come to 100 dollars a month, and it takes |
| have more money to spend, and more to invest as | | | | 4,000 dollars to close on the loan, you need to make |
| well. | | | | sure you are making enough monthly payments to |
| What It Means to Refinance Your Mortgage | | | | cover that cost, before you move. |
| When you refinance your home mortgage, it means | | | | Also, you will need to decide whether you want to |
| that you are essentially paying back the entire first | | | | stay with your current lender, or whether you would |
| mortgage that you took out, and then taking out | | | | like to change lenders. If you stay with your current |
| another mortgage for what remains on your home. It is | | | | lender, chances are good that for a fee you can |
| important to consider whether or not you want to | | | | renegotiate your mortgage at a lower interest rate, |
| refinance very carefully, so that you will be able to | | | | which is different from refinancing but which will give |
| make a good choice about the type of mortgage you | | | | you the same general outcome. If you can't |
| want to have. | | | | renegotiate with your current lender, try taking a look |
| How to Decide | | | | at what other lenders have to offer. Often, they are |
| The first step in getting a lower interest rate and lower | | | | going to be more than willing to work with you on a |
| payments by refinancing your home is to make sure | | | | good deal. |
| that you are going to be getting the best deal by | | | | Another question that you might want to ask would be |
| choosing another mortgage. First of all, you want to | | | | if you should refinance your mortgage at a larger |
| refinance a mortgage if the current mortgage interest | | | | amount than what you currently have. This is a good |
| rate you would be able to get is at least two | | | | option if the value of your home has increased, |
| percentage points below what you currently have, if | | | | because it means that you are then going to be putting |
| not more. If this is the case, you should continue with | | | | an amount of money into the home that makes sense |
| your decision to refinance your home. | | | | for the value of the home. This will also allow you to |
| What It Affects | | | | build more equity and therefore be able to access this |
| When you have a lower mortgage interest rate, you | | | | home equity as well. Just make sure that you can |
| are going to be paying less total interest each year. | | | | afford the larger mortgage, generally this is possible if |
| Therefore, your tax deductions for mortgage | | | | you are refinancing to a lower interest rate, but it |
| payments are going to be less. This will lead to an | | | | definitely pays to check and double-check to prevent |
| increase in your income tax liability. Therefore, you will | | | | future problems. |
| need to offset this towards the savings that you have | | | | |