Should Your Refinance?

Determining if refinance mortgage loans are right for you is a difficult and important decision. Here are some questions to ask to help you make the right choice.

• What are interest rates like? If you have an ARM and anticipate that interest rates will rise in the future, you would do well to refinance mortgage loans to a fixed-rate loan. This way, you can lock in a low, fixed rate for the life of the loan regardless of what market interest rates are doing.
• Is your monthly payment too high? You should consider refinancing mortgage loans if your monthly mortgage payment is too high for your budget. Even if interest rates are the same as when you took out your original mortgage, you can use refinance mortgage loans to extend the term of your loan. This will lower your monthly payment burden considerably.
• Is your ARM too stressful? Many homebuyers are attracted to the unbeatably low interest rates adjustable-rate mortgages can offer, only to discover later that they are not comfortable with the fluctuations in interest rates. If you would like a consistent interest rate and monthly payment, you might consider fixed-rate refinance mortgage loans. A fixed-rate loan will make it easier to plan and budget.
• Is your income higher? Refinance mortgage loans can also help you if your income has recently increased. If you're in a position now where you can make higher monthly payments on your mortgage, you might want to use refinance mortgage loans to shorten the term of your loan. This will help you pay your home off faster, build equity quickly, and save thousands on interest expense.
• Do you have more than 20% in home equity? If you had a down payment of less than 20% when you took out your mortgage, you are probably paying PMI (private mortgage insurance). This costly additional expense can be eliminated once you build at least 20% equity in your home. Once you hit the 20% marker, you can look at refinance mortgage loans that do not include PMI.