Title:
Is It Time to
Refinance Your Mortgage?
Word Count:
515
Summary:
Have interest
rates dropped since you first bought your house? Are you in a considerably
better place financially and credit wise than you were when you first got your
mortgage? Are you looking for a way to lower your monthly mortgage or loan
payments? If any of the above are true, then it may be time to take a closer
look at a refinance mortgage.
Keywords:
refinance
mortgage, refi, refinancing mortgage, refinance loan, freelance writing,
original content
Article Body:
Have interest
rates dropped since you first bought your house? Are you in a considerably
better place financially and credit wise than you were when you first got your
mortgage? Are you looking for a way to lower your monthly mortgage or loan
payments? If any of the above are true, then it may be time to take a closer
look at a refinance mortgage.
A refinance mortgage, or 'refi' as it is popularly referred to, is a loan taken
out specifically to pay off an existing loan for the purpose of lowering your
current monthly payments - or reducing the total amount of interest that you'll
pay. Refi loans become more popular when interest rates drop significantly,
though there may be good reasons for you to consider a refinance mortgage loan
even if the general interest rates have remained the same or increased. How
does refinancing your current mortgage lower monthly payments and when should
you consider a refinance mortgage loan?
Suppose that you bought your house with a mortgage loan from a local lender.
Because of your lack of credit history and your decision to put down a small
down payment, you ended up with an interest rate that was slightly higher than
average. Five years later, the standard interest rates have dropped by nearly a
full percentage point - which puts them nearly 3 percentage points below the
interest rate on your current mortgage. You've been with your current employer
for seven years, lived in the same house for five and have built a solid
history of on-time payments on your mortgage and credit cards. You're in the
ideal situation to seek a refinance mortgage because:
1. Your credit rating nearly guarantees the lowest interest rate available on
new loans.
2. A drop of 3 percentage points on your mortgage is significant. Most experts
recommend considering refinancing if the new interest rate is at least 1 full
percentage point lower than your current interest rate. In fact, drops of as
little as half a percentage point in the APR can significantly lower your
monthly costs.
3. Your original mortgage carries a higher interest rate than market rate
because of financial circumstances that no longer exist.
One other reason you might take out a refinance loan is to shorten the term of
your mortgage. If you originally took out a 30 year mortgage at 5.25% APR,
refinancing the loan for 20 years, even at the same APR, will lower your
overall cost considerably though your monthly payments will be higher. Still,
if you're in significantly better financial circumstances than you were when
you took out the original mortgage, the overall savings could make it worth
your while to refinance.
There are several factors to consider when deciding whether or not to refinance
your existing mortgage. Most mortgages carry an early repayment penalty, for
instance. There are also fees and closing costs associated with the new loan to
add into the mix. You'll need to consider all the costs of taking out a new
loan against the possible savings of a lowered interest rate before you decide
if it makes sense to refinance your mortgage.