Refinance

Refinancing a mortgage can make a lot of sense depending on your financial situation and needs, and if your home has the required amount of equity built up. Refinancing can offer many benefits including:

• paying off your mortgage faster
• lowering your mortgage interest rate
• accessing additional cash for travel, investments, etc.
• paying off higher interest credit cards and accounts
• borrowing against the equity in your home to perform upgrades, etc.

As with any other loan agreement, there are things to consider, including how much equity is built up in your home, and any legal costs you will be required to pay. Refinancing can incur the same opening and closing costs as your first mortgage, so make sure you understand this up front. These may include bank fees, a new appraisal and inspection, and legal fees. Make sure that the benefits of refinancing outweigh the costs as they can take quite a bit of time to repay on a new mortgage. A real estate or lending professional can help you make an informed decision.

Since the best time to consider refinancing is when interest rates are low, it's a good idea to do your research and keep track of the factors that influence lending rates. These factors include inflation, stock and bond markets and changes in the economy. For most people, understanding all these factors is a bit overwhelming, and so it's best to seriously consider your options once the interest rate has dropped below what you are currently paying. It's virtually impossible to predict what will happen in a week or a month, so consider your options while conditions look good. As a rule of thumb, interest rates will increase as the economy improves.