To refinance or not to refinance
HOME. If you are not sure whether to refinance your current home loan then there are some important things you should consider:
- Do you have a good interest rate now? Even if you have a high interest rate on your current mortgage you should look at what type of rate you could get now and consider if it will make any difference in your payment costs.
- How much are the closing costs? You may be able to refinance to a lower interest rate, but with the closing costs you may not actually save any money.
- Do you need to get some cash out of your equity? Refinancing may not be the best way to tap into your home as a financial resource. If the refinance will leave you with a higher interest rate then you should look into a home equity loan or line of credit. It is better to pay a higher interest rate on a home equity loan than to pay a higher interest rate on your entire mortgage loan.
- Consider what the future projections for interest rates are. If the experts believe interest rates are going to drop in four months then you should wait and get the better interest rate.
- If you are Veteran, you can take advantage of the benefits afforded by the VA Home Loan Program with a VA Refinance. VA Loans can be refinanced using a variety of lending instruments, including streamline and cash-out refinances. When interest rates are favorable (as they will return to be in the near future), it is important for people to ensure they are obtaining the best financial setup from their home mortgages. If you qualify under the VA or have an existing VA Loan, be sure to check with an approved lender for updates. The VA itself does not originate loans.
If you are thinking about refinancing make sure you consider all of your options and weight the benefits against the negative outcomes before you make a final decision that could cost you money rather than save you money.