If you are Considering a House Refinance, Ask Yourself These Four Questions

There are four things you will need to know if you want to do a house refinance. These are; your current mortgage rate and amount; the mortgage rate for a new loan; your approximate refinancing costs; how long you will be staying in your home.

The current mortgage rate and amount should be on your monthly mortgage statement. If it is not listed on the statement, you can call your lender and get that information. At the very least the principal owed should be listed on your statement.

Mortgage interest rates change frequently. You can find up-to-date mortgage rate information at www.interest.com. If you are refinancing you should look into shortening the length of your loan. Often when your interest rate is lowered you will find that by paying same monthly amount or just a few dollars more you can significantly cut the length of your loan.

Talk to your lender to find out exactly what your refinancing costs are going to be. These costs differ depending on where you live, but they will probably include an appraisal fee, lawyer fee and lender fee. You need to know up front what your refinancing fees will be so you can determine if you can recoup the costs fast enough to justify refinancing.

You will need to know what your payback period is to determine if you will be in the home long enough recoup your refinancing costs. The payback period is the time necessary to recover your costs. Once you know what your payback period is, you can decide if you will be in your home long enough to cover the payback period. For some people this is a very easy decision, they know they will be in their home forever. For others the decision is not so clear-cut. But it is vital that you plan for this because it can determine the ultimate success of the house refinance.

If all of this seems overwhelming to you then you should start interviewing lenders. They will be able to go over this information with you and make it understandable. And you will be able to find someone you are comfortable working with during the interview process.