| · | The longer you have had your present loan, the less advantageous it is to refinance, especially if the difference between your old and new interest rate isn't significant. This is because most of your house payments in the early years of your Mortgage Loan are all interest, not principal. The longer you’ve made the payments, the closer you are to paying off the principal. Use an online Refinance Mortgage Rate Calculator to help do the math and see if this is an effective strategy for you. |
| · | Before making a decision on refinancing, estimate how long it will take to recoup your costs and how long you plan on staying in your home. One tactic is to weigh monthly savings against up-front costs. Saving a few hundred dollars a month may not be worth it if you're planning to move soon, as you’ll potentially be paying several thousand dollars in up-front costs just to refinance. |
| · | Keep your credit history squeaky-clean. Falling behind in auto, credit card, or mortgage payments can prevent you from getting the best possible Refinance Rates. If your credit history is worse than when you first took out your home, refinancing could actually jack up your mortgage payments and interest bill! |
| · | To find the best deal, start with your current home Mortgage Loan company. Some online lenders have marketing programs designed to retain current borrowers by offering them special low-rate, low- or no-cost refinance packages. You may be able to get some of the fees waived if you return to your original lender. But given the competitive marketplace, it’s entirely possible that competing lenders might be willing to omit some charges just to snag your business. |
| · | Borrowers with less than stellar or bad credit may want to check out "automatic refinance mortgages" or "reverse-rate mortgages.” It’s kind of like an Adjustable Rate Mortgage in reverse. These kinds of loans guarantee that your interest rate will drop by as much as 1.5 percentage points below your starting rate--even if market rates are higher at the time. These mortgages give you a chance to prove you can make mortgage payments on time and over time. These loans involve annual interest rate decreases spread out over a couple of years. Eventually the rate becomes fixed. The catch: you must make all payments on time, maintain a good credit standing and not fall below the income level you listed on your loan application. |
| · | Refinancing can be the best way towards debt consolidation. When you combine higher interest bills with your mortgage, you will likely benefit from lower interest rates, tax-deductible interest payments and an improved credit rating. |
