Are You Considering Re-Financing?

Refinancing your home mortgage can be a great decision- if it saves you money! A homeowner naturally would not refinance if a new mortgage cost him or her more money than it saved.Householders who are considering re-financing their house may have a wealth of choices available to them. However, these same householders may find themselves feeling overwhelmed by this wealth of choices. This process doesn’t have to be so difficult though. Householders may greatly assist themselves in the process by taking a few simple steps. First the householder should determine his refinancing goals. Next the householder should consult with a re-financing expert and finally the householder should be aware that re-financing isn’t always the best solution.

Determine Your Goals for Re-Financing

The first step in any re-financing process should be for the householder to determine his goals and why he’s considering re-financing. There are many different answers to this question and none of the answers are necessarily right or wrong. The most important thing is that the householder is making a decision which aids him achieve his financial goals. While there are no right or wrong answer to why re-financing should be considered there are, however, certain reasons for re-financing which are very common. These reasons include:

* Reducing monthly mortgage payments
* Consolidating existing debts
* Reducing the amount of interest paid over the course of the loan
* Repaying the loan faster
* Gaining fairness quicker

Though the reasons listed above are not the only reason householders might consider re-financing, they’re a few of the most popular reasons. They’re included in this article for the purpose of getting the reader thinking. The reader may get their mortgage re-financing scheme fits into one of the above goals or they may have a completely different reason for wanting to re-finance. The reason for wanting to re-finance is not as important as determining this reason. This is because a homeowner, or even a financial advisor, will have a difficult time determining the best re-financing alternative for a householder if he doesn’t know the goals of the householder.

Consult with a Re-Financing Expert

Once a householder has figured out why they would like to re-finance, the householder should consider meeting with a re-financing expert to determine the best refinancing scheme. This will likely be a scheme which is financially sound but is also still geared to meeting the needs of the householder.

Householders who feel as though they’re particularly well versed in the subject of re-financing might consider skipping the alternative of consulting with a re-financing expert. However, this isn’t recommended as even the most educated householder may not be aware of the newest re-financing alternatives being offered by loaners.

While not understanding all the alternatives may not seem like a big deal, it may have a significant impact. Householders may not even be aware of mistakes they’re making but they may here of friends who re-financed under similar conditions and receive more favorable terms. Hearing these scenarios may be quite disheartening for some householders specially if they could have saved considerably more while re-financing.

Consider Not Re-Financing as a Viable Option

Householders who are considering re-financing may realize the importance of measuring a number of different re-financing options to determine which option is best but these same householders may not realize they should also carefully consider not re-financing as a choice. This is often referred to as the “do nothing” option as it refers to the conditions which will exist if the householder doesn’t make a change in their mortgage situation.

For each re-financing option considered, the householder should determine the estimated monthly payment, amount of interest paid during the course of the loan, year in which the loan will be fully repaid and the amount of time the householder will have to remain in the house to recoup closing prices associated with re-financing. Householders should also determine these values for the current mortgage. This may be very helpful for comparison purposes. Householders may compare these results and often the best choice is rather clear from these numeric calculations. However, if the analysis doesn’t yield a clear cut answer, the householder may have to measure secondary characteristics to make the best possible decision.