If you want to refinance your mortgage be sure to know why you are doing it and the consequences of doing so.
Refinancing your mortgage can be a great idea if it will save you money in the long term.
Most people seek out a mortgage refinance to take advantage of lower interest rates. Yes, there can be a penalty if you cancel your current mortgage (often 6 months interest charge or similar), but sometimes if you can get a lower interest rate, you can be paying less monthly and save thousands over the term of the loan.
Also, many mortgage loan lenders let you refinance your home in order to consolidate your debts. A lot of people have too much credit card debt and the interest on each card is usually between 9% and 18% or even higher if you are talking about department store cards. And if you have 2, 3, 4 or more cards, and you owe near the limit on most or all cards (e.g. $5,000 – $10,000), the debt can take on a life of it’s own after a while and then you are in real trouble. Soon you will not be able to make the monthly payments and it will ruin your life. Sad, but too true in thousands of cases each year.
Use our mortgage amortization schedule calculator to find out what your monthly mortgage payments would be for various rates of interest.
You also need to decide if you want a variable or adjustable rate mortgage or a fixed rate.
A fixed rate is safer and fixed for the life of the mortgage term (usually 5 years), whereas a variable rate offers lower interest and therefore lower monthly payments, but the rate could go up during the mortgage if the prime rate of interest in the market rises. It is best to talk to a professional before getting into anything.
It is advisable to discuss with a mortgage broker in your area because they can get bids from many banks or other lenders for your business.
The financial institution pays the broker so you win by having them help you. Just be sure they are well known and you can see testimonials of other people they have worked with.
Paying off your mortgage faster and getting debt help when you need it has never been easier.