How to Refinance Your Mortgage?

Today we're going to talk about the mortgage refinance. I think you can do the pretty easy low-hanging fruit thing refinancing your mortgage. Now there's some important things to consider whenever you're going to refinance and so here are my four rules for a home run refinance.

First can you lower your interest rate? A lower interest rate means you'll spend less money on repaying the bank for your loan. Today’s interest rates are near historic lows and chances are that you can do better than the eleven percent, the seven percent or even the five percent interest rate you have now. Can you lower your mortgage payments this is point number two. Ideally you want to pay less each month and you can do this by extending your mortgage term. Which is not great because if you took out a 30-year mortgage rate at initial mortgage term and now you want to take out another 30 year mortgage term. You’re going to end up paying interest on interest. While lowering your monthly payments will give you more breathing room. It’s not usually worth the extra cost you pay over the long term.

Now if you tell me that number one on your list is paying less each month and you don't care how many years you have to pay it. Then you're going for that even if you have to do another 30-year term. But for most people the kicker for really saving money is point number three reducing the length of your loan term. So if you can secure a loan of interest rate you'll be able to reduce but the length of your loan and the cost of your monthly payments those savings really will add up. So for example if you took out a 250 thousand dollar refinance loan at five percent for 30 years you would pay almost two hundred and thirty thousand dollars over the life of the loan interest but if you save five years off that same loan will save nearly 45,000 dollars.

Now imagine if you are saving five years off that loan and now you're bringing down the interest rate as well and your savings are going to multiply the last thing. The thing that people sometimes forget to do is you have to manage the cost of the refinance. so on top of the administrative fees you're homeless too also be appraised inspected and assess and you may pay a penalty for paying off your mortgage early and that typically early prepayment penalty is only the first two to six years of a mortgage.

So check the details of your court current mortgage agreement before moving ahead with a refinance. Whatever you do make sure you can pay off the cost of the refinance within six months to a year and try to keep the costs under $2,000 colon. It’s going to be a little bit hard to do if you have a higher-end cost home but if your home is only maybe a hundred to two hundred thousand dollars or rather the mortgage amount somewhere between a 2000 2500 dollars would be ideal. That’s it on mortgage refinance, keep visiting extramortgage for more.