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Should You Refinance Your Mortgage?

Created: On February 10, 2009 @ 6:09 pm In

So you’re wondering if it makes sense to refinance your mortgage because of low interest rates. Although mortgage rates are low compared to historic levels, the amount of interest you’ll pay shouldn’t be the only factor in your decision.

Generally, you want to break even on what you pay out to refinance a mortgage within about three years. If you plan to move before then it may not be worth it to refinance your mortgage.  However, refinancing could be a good deal if you qualify for a loan that doesn’t require any [1] upfront payments or changes in the total amount of your loan or the interest rate to include the costs in the loan.

Also consider whether your home’s value has fallen and what impact that will have on a refinance. If you have less than 20% equity in your home you’ll likely be required to pay for private mortgage insurance (PMI).

If you have an adjustable rate mortgage (ARM), refinancing into a fixed-rate mortgage at today’s low rates can give you peace of mind that you won’t have to face huge jumps in your monthly payments when interest rates change. Interest rate resets on ARMs have been a huge factor in the swell of foreclosure filings throughout the U.S. 

About the Author

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows. 

Article printed from DebtHelp.com Blog: http://www.debthelp.com/blog

URL to article: http://www.debthelp.com/blog/2009/02/10/should-your-refinance-your-mortgage/

URLs in this post:
[1] upfront payments : http://seattlepi.nwsource.com/money/399168_real07.html