Mortgage Refinancing: Is Refinancing Your Mortgage the Right Choice?

By Louie Latour

Before you refinance your mortgage you need to decide if refinancing is right for your financial situation. Refinancing your mortgage should save you money, although there are other reasons for taking out a new mortgage loan. Here are several tips to help you decide if you will benefit from refinancing your mortgage.

The first question you should answer when deciding if refinancing will benefit you is how long will you stay in your home. The reason for this is that there are costs associated with taking out a new mortgage and you need time to recoup your expenses from the potential savings. A general rule to follow is the longer you plan on living in your home, the more you could benefit from refinancing.

The next thing you need to know about your existing mortgage is whether or not it comes with a prepayment penalty. Mortgage lenders include penalties in their loan contracts for early termination of the loan. This means that if you refinance or sell your home before the prepayment penalty expires you have to pay a fee. This prepayment penalty can be a hefty expense so it is important to determine if your loan contract includes one before you refinance your existing mortgage.

When shopping for a new mortgage it is important to determine the exact cost of each mortgage offer you are considering. These costs include application fees, appraisals, origination points, title and insurance expenses, and closing costs. These fees vary from one lender to the next; careful comparison shopping can save you thousands of dollars.

You should also consider the break even point once you know how much refinancing is going to cost you. To determine this you simply divide the cost of refinancing your existing mortgage by the amount you will save on your mortgage payment each month. This will tell you the number of months it will take you to break even before you realize any savings from refinancing your mortgage. You can learn more about your mortgage options, including common mortgage mistakes to avoid by registering for a free mortgage guidebook.

To get your free mortgage guidebook visit RefiAdvisor.com using the link below. Louie Latour specializes in showing homeowners how to avoid common mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing: What You Need to Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com. Claim your free guidebook today at: http://www.refiadvisor.com Mortgage Refinancing for Dummies Article Source: http://EzineArticles.com/?expert=Louie_Latour