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Should I Refinance My Home Loan?

Refinancing is an easy and almost guaranteed way of saving thousands of dollars. It allows you to lower your monthly payments, therefore making the overall cost of your home lower. If the current market interest rate is at least 2% lower than what it was when you received your loan, consider refinancing. Be careful in choosing the type of refinancing however because you do not want the interest to just back up.

Refinancing allows borrowers to take advantage of the current market. Often time’s people will continue to pay their current monthly payments without looking at what the current interest rates are. This usually happens when you are set with a fixed mortgage and you are content with the interest rate you first settled with. Be sure you know all your options that way you can save yourself money.

Tips of Refinancing

Knowing a few helpful tips can save you much money in the long run. Having a set plan when refinancing your home loan is the best way to approach the situation. Here are some of the tips that can help you go about finding the best home loan refinancing!

 

  1. Stay Currentâ€"check often what the current interest rates are.
  2. Do The Mathâ€"make sure that refinancing will indeed save you money.
  3. Rule of Thumbâ€"if the interest rate is less than 2% different from your current rate, you may not want to refinance.
  4. Hidden Costsâ€"make sure you look into lenders that advertise both low interest rates and no application costs.

Where to Refinance My Home Loan

Finding the right institution to refinance with can be important. You always want to make sure you are doing the best thing for your financial well being. A great place to start is with your current home loan lender. If you have proven to be a safe person to lend their money to then chances are they are going to want to keep your business and offer you a good option. However don't stop there! There are many other places to look, such as banks, mortgage brokers, and online refinance companies. Refinancing online can be a safe bet because it is easy and fast. Other places might have you waiting around for and answer while in most cases refinancing online can be done fast. A lot of online companies have many professionals working hard to get you the best refinancing rates that they can. It is in your best interest to do a little research before you refinance with the wrong company.

What to Expect When Refinancing

When you finally decide it is time to refinance your home loan you should feel comfortable with your choice and the financial institution you have chosen to refinance with. You should expect that you are getting a better rate then you originally had when you first got your home loan. If you refinance and you rates have gone up then it isn't the right time for you to make this decision. You should also expect to see your monthly payments decrease. A decrease in your monthly payments can mean much money saved over time, plus not to mention the fact that it can free up funds every month that you can put to your other financial needs. Be sure that you feel comfortable with your decision and always consult a professional before making a decision that can impact your financial health.

National Rate Averages

Mortgage Rates

Product Rate
5/1 yr ARM 3.147%
1 yr ARM 3.299%
15 yr fixed 3.221%
30 yr fixed 3.815%

Home Equity Rates

* Updated Jun 8, 2012
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