Easy Steps
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Author: Tony Forster
There are several reasons why you should consider a refinance mortgage on your home loan.
When you do, you can cut your monthly mortgage payments.
In addition, you can tapinto your equity, or your home value, in order to pay off otherloans and credit cards.
This in turn helps you to deduct your mortgage interest from your taxes.
Now that you know thebenefits let us now go to the steps. Thefirst thing you need to consider is the current trend in interest rates.
Most major Sunday newspapers feature this type of information in their real estate section. Find out the current interest rates from local dailies or online quotes.
You can also contact a mortgage broker and speak with a real person about your home refinancing questions.
If this is not your first attempt at getting financingfor your home, then you probably known that there are actuallyseveral types of loans. The second step therefore is to identifythe type of mortgage you want - whether it is fixed, adjustable,or a combination of the two. Remember that each type may mean adifferent set of advantages and disadvantages for your homerefinance venture.
The third step is comparison shopping.Compare the new interest rates to that of your current mortgage.To do this, find out what possible monthly payments are beingspoken of with your new loan.
You can use the amount you owe on the loan to calculatewhat the new monthly payment would be by using a financialcalculator or an online mortgage calculator. You'll also need toknow the new loan amount (current loan amount plus closingcosts, such as points, title and escrow fees - unless you planto pay for them out of your pocket - the new interest rate, andthe number of months of the new loan).
To find out howmuch you can save with your home refinance mortgage, subtractyour current monthly mortgage payment from the new monthlymortgage payment. The remaining balance is your monthly savings.
After you get the figure for your savings, divide it intothe total cost of the loan, which includes points, title, andescrow fees.
The resulting figure is the number of months itwill take for you to recoup your investment.
Then finally, determine how long you plan to stay in yourhome. If you plan to live in your home longer than it will taketo recoup your investment, then refinancing your home isprobably a good idea.
About the author:
Tony Forster has a keen interest in living debt free havingbeen "up to his ears" before I realized the need to takecontrol. I am compiling a useful online resource at
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