The article concerns the following question – Should you ever refinance your mortgage? There are a lot of considerations that go into deciding whether or not you should refinance your mortgage and the decision as to whether or not you should do it is going to depend in large part on why you are refinancing. There are some good reasons to refinance your mortgage and there are also some not so good reasons that people choose to refinance.
Understanding when it is a good idea to refinance and when it isn’t is important to helping you make the right decision. A mortgage is probably the biggest investment you will ever make so this is an area in which you really don’t want to make a mistake.
The good reasons to do a refinance mortgage procedure all revolves around being able to get a lower rate. Mortgages last for a long time and over the course of that time there will be changes in interest rates and it is quite likely that you will be able to get a lower rate at some point during the course of the mortgage.
It may also be a good idea to take advantage of the opportunity to lock in a low rate if you think rates will go up. If you are on an adjustable rate mortgage and interest rates go down and you think they will go back up again in the future it is often a good idea to refinance.
The other big reason that you might want to refinance is to turn some of the equity in your home into cash. This can be good or bad depending on what you do with the money. There are times that it is good to turn your equity into cash for example to pay off high interest debt like credit cards, sometimes it is a good idea to use the money for an investment or to improve your home.
Using the money to purchase something that will neither save you money nor increase in value would be an example of a bad reason to refinance your mortgage. Another consideration if you are thinking about refinancing is how much it is going to cost you. There are going to be fees and penalties involved in a refinance. You will need to pay fees to take out a new mortgage and there will likely be penalties to get out of your old mortgage. It is important to make sure that you know what these fees are going to be and to make sure that it still makes financial sense.
There is no value in refinancing your mortgage to save money on interest rates if the fees and penalties are more than the amount you are saving. This is something that you are going to have to make sure that you figure out before you start the process of refinancing. This can be fairly complicated so you may want to talk to an expert to make sure that it really does make sense to refinance your mortgage.