Now Is an Excellent Time to Refinance Mortgage Loans
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by: marciafreeman
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Is the time ripe to refinance? Mortgage interest rates have dropped so low in May 2009 that you may be tempted to refinance. But is it the right time for you?
The first sign that it is a good time to refinance mortgage loans is that the average interest rate is two or more points below the interest rate on your existing mortgage. This difference between interest rates is large enough that it is likely to make up for what you will need to pay in refinancing fees. However, you may find that the formula does not fit your situation. If you do not stay in the house long enough for the savings from the lower interest to equal the refinancing fees you paid, you will actually lose money from the refinance.
Lowering your monthly payment is another reason to refinance mortgage loans. If you are pinched financially, cutting the amount you pour into your mortgage each month can reduce your stress significantly. You can lower your mortgage payments by refinancing to a mortgage with a longer term, which means a higher total bill but a smaller monthly bill. Or, if you plan not to own your house for much longer, you can drop your monthly bills even lower by taking out a non amortizing loan. When you refinance mortgage loans with a non amortizing loan, you pay only the interest on the loan for a grace period of several years. When the grace period ends, you are responsible for paying the principal off on an accelerated schedule, or even in one lump sum. However, if you sell or refinance the house before the end of the grace period, you get the benefit of lower monthly payments, and repay the balance of the loan with the proceeds from selling or refinancing the house.
If your analysis tells you its time to refinance, mortgage interest rates are ideal. On the other hand, your personal situation may not make refinancing a sound choice right now. Wait to refinance; mortgage interest rates will fall again. Either way, rely upon your sense of your own financial situation, not outsiders opinions or articles in the paper, to decide when you should refinance.
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For more related to home mortgage, link to www.getsmart.com/refinance.
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