When is the Right Time to Refinance My Home Or Condo Mortgage?

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To refinance a home mortgage is a very serious decision that should not be done without proper research before hand. Your number one over all goal should always be and remain to pay off your home. Mortgage refinancing can either help this or hurt this depending on which way you take it. I think, that the only reason to refinance a home is to get into a better loan with a better interest rate, or shorter terms. For example, if you pay 8% interest on your home mortgage, have 15 years of payments left, then refinancing into a 6% 15 year mortgage, will most likely be beneficial for you. Or to shorten the length of the loan, which also builds equity in your home faster. Both of these examples would help get you to your ultimate goal of paying off your home.There are all different situations people have with their mortgage, but the rule of thumb is that you should consider refinancing when the current interest rates on a mortgage are around 2% (hopefully more) less than your current interest rate. This will decrease your payment on your house every month while being able to pay it off in the same time as you would have. There are fees associated with a refinance, that may be advertised as free or low cost, but beware of those. You should expect to pay a fee and preferably pay it upfront, even if they offer to add it to the loan total. Then you would just pay interest for the length of the loan on their closing fees, and that is throwing money away. Typically, most people report “breaking even” from a mortgage refinance in about 36 months from the day they signed the papers. Check online for mortgage calculators and you can get a rough idea of your possible savings.Do not refinance just to get some extra cash. This is dangerous, putting your house at risk. After a refinance, if you miss a mortgage payment, for any reason, it is easier to lose everything you have worked for. If you use the money for home improvements, which add to overall value of the house, then it may be worthwhile. Also, if you are moving within the next couple of years and want a cheaper mortgage payment until then.-M Petrone

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