Mortgage Refinancing Tips - part 1
by Bob Hartz
The land rush atmosphere that has surrounded mortgage refinancing in recent years seems too often to have raised examples of people who simply didn't have a clear idea of why they were refinancing, other than to take advantage of lower interest rates. The first refinancing tip is to figure out the answer to the question, "Why?"
Just a Better Mortgage
Suppose, for example, you simply want to lower your monthly mortgage payments. If so, then you are principally looking for a refinance product with more favorable interest rates and/or a longer term. Both of those goals will lower your monthly mortgage payments. You will also lose some of that tax deduction factored from mortgage payments, so it's important to make some assumptions on how long you intend to keep the loan and then build two cases, one with the old mortgage and one with the new. In your examination of the new loan, incorporate higher anticipated income taxes and all of the up front fees and costs.
Shortening your Mortgage
Perhaps your goal is to shorten your payoff. This will be a note with higher mortgage payments, but with a reduced interest rate. A loan of this nature may maintain the tax advantage that your original interest rate had on the longer loan, or even raise that tax deduction a little. Here again, however, there is a history of shortened mortgages like this having very high entry costs and fees, simply because the loan payoff period is shorter.
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Mortgage Refinancing Tips
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