Financial Management - Refinancing Your Home

Right now mortgage rates are incredibly low.  So is now a good time to refinance your home?  It might be.  But before you do you want to crunch the numbers and make sure this is the right move.  Closing costs to refinance are expensive and you want to make sure it is going to be worth it.  But a lot of contributing factors can negate that expense in the long run.

Is the interest rate a lot lower?  If the interest rate is 1% or more lower than your current rate then it very well might be worth doing.  Run an amortization schedule on your current balance with a lower interest rate and see how much you will save over the term of your mortgage.  In most cases the savings is significant.

If you have equity in your home there are a few more things to consider.  Do you have a lot of consumer debt or student loans you could add to your refi that would clear up your debt load.  Right now is not a good time to carry a lot of consumer debt.  Usually by rolling a large amount of debt into a refi it will lower the total amount of payments going out each month.  But be very careful.  If you go right back out and accumulate more consumer debt then you will find yourself in trouble once again. 

If you currently have a mortgage with a lender you are not happy with it may be a good idea to shop around for another lender.  Sometimes peace of mind and a better quality experience is really all you need to justify the cost to refinance your home.  Benefits come in many forms.

So is it the right time to refinance your home?  Weigh and measure the pros and cons, do the math, and consider how long you intend to remain in your home before you sell.  At the end of all of that, if it feels like the right decision for you then contact a lender and see what they have to offer.  It just might be the right time.

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