Should You Refinance Your Mortgage?
Mortgage rates have fallen quite a bit in recent months, so a common question is whether or not you should consider refinancing. The benefits are easy to understand. The lower the interest rate, the lower your monthly payment and total cost of buying a home. But before you rush into a refinance, there are some drawbacks to consider.
For starters, it costs money to refinance. In some cases, it can cost thousands of dollars. So, while you may be lowering your monthly payment, how long will it take to break even on the closing costs? Six months? A year? Three years or more? If you aren't sure whether you'll be in the house long enough to offset the cost, a refinance could end up costing you more.
Refinancing your mortgage can be a great way to save money, but make sure you consider all of the pros and cons before signing any papers. It is an important decision, and if you aren't careful, it could prove costly.
Comments
Like you said doing a cost benefit analysis is key. For a lot of people the lower rate will not reduce payments over the long term because of the difficuly in getting the refinance loan and/or assoicated fees. In a recent look at the criteria for refinancing , you needed to have a credit score greater than 720, stable employment and a 20% or more net equity stake. Not so easy for many people in the current economy.