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Mortgage Refinancing: Is it Your Turn?

By: Allison Millar, Contributing Writer
In: In the news
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Mortgage rates are always in the news. They go up and down, but what does that mean to you? If money is a little tight, you might be wondering if it’s the right time for mortgage refinancing? How can you tell if saving a few dollars a month is worth the effort?

Mortgage refinancing, which has taken a hit during the housing decline, is on the upswing, according to this report from MarketWatch. While low mortgage rates are good, you have to look beyond the rate.

Mortgage Refinancing: Yeah or Nay?

Just remember one thing. Mortgage refinancing always has a cost, despite the promos for “no cost” mortgages. This simply means the lender is not charging you directly, but adding the cost into the rate. Nothing wrong with that, but try not to get charmed by the “no cost” term.

Mortgage Rates: What’s in a Number?

When doing the math on the mortgage rate, look at the spread between your current rate and the new one. Is the change big enough to justify the add-on fees? If you’ve ever refinanced, you know about all those fees. (Or, check out this list from Yahoo.)

Mortgage Refinancing: What Extra Costs?

Extra costs, you ask? Those are the appraisal fee and the title company fee. Sometimes the mortgage company will waive them, but not always. Add up any fees you have to pay out of pocket and see if it’s worth it. This refinancing worksheet from Smart Money can get you going.

Also think about what you plan to do with the extra cash each month. If you pay down a home improvement loan or put money into savings, you can be ahead of the game.

Mortgage refinancing can be a good thing, lowering your monthly debt and allowing you to breathe a little easier at night. You might even save enough to fund a small home improvement project this year. Hurrah for that!

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