It has been hard to miss the boom in home refinancing that has been happening in recent years. Record low interest rates, coupled with record high home prices, have spurred many homeowners to take advantage of various refinancing deals.
There are a number of important reasons for refinancing a home, but it is important to ask your self - is it time to refinance? The answer to this question will have a profound impact on your financial future, and the value of your most important asset.
The interest rate is king
When considering whether or not to refinance, the interest rate is of course the most important consideration of all. A lower interest rate is the number one reason why people refinance their homes, and it should be your primary consideration as well. If it has been more than a few years since you bought your home, chances are that interest rates are lower now than they were then, and this can make home refinancing an attractive option.
Of course it is important to remember that the interest rate for which you qualify will be greatly affected by your own credit history. Any negative events in your credit history since you purchased your home could cause those super low rates to be unavailable to you. For this reason, it is always a good idea to review your own credit report prior to exploring any refinancing offer.
What about fees and closing costs?
It is also important to pay attention to any fees and closing costs you may be asked to pay in order to refinance your mortgage loan. In some cases the mortgage company or bank may be willing to waive certain fees and expenses, but they may charge a higher interest rate. It is important to compare the various refinancing offers you receive to determine which one is truly the best deal.
It is also a good idea to consider using a refinancing offer to shorten the term of your home mortgage loan. Many homeowners assume that the only reason to refinance is to get a lower interest rate, but the fact is that a mortgage refinancing deal can be a great way to shorten the length of the mortgage as well. If paying off your mortgage in half the time appeals to you, it may be a good idea to consider such an option. No matter what your reason for refinancing, it is important to act quickly. These record low interest rates will not last forever, and it is important to act while they are still around.
Brooke Sikula is a freelance writer based in Ventura, CA and writes on a wide range of topics from home improvement to credit repair and everything in between. She is a regular contributor to http://www.get-home-improvement.com and http://www.loan-mortgage-auto.com. For more information on real estate and mortgage finance, check out http://www.loan-mortgage-auto.com.
