Thursday, January 21, 2010

Refinancing A Mortgage - Considering Refinancing

Refinancing A Mortgage - Considering Refinancing

There are many avenues of refinancing available to homeowners who are deliberating whether to refinance their home. To help in deciding the best route, homeowners should first assess what their needs are. After these goals have been calculated, a refinancing expert should be consulted. The refinancing expert will assist the homeowner to wade through the plethora of choices and simplify the process of obtaining refinancing. With this information in hand, the homeowner can decide whether refinancing is indeed the best choice for their situation.

Assess Your Needs

The first step a homeowner needs to take is assessing his needs, along with determining his purpose for refinancing. There is no right or wrong answer to this question. In fact, there may be several answers. The essential determination is whether refinancing will assist the homeowner to obtain his financial objectives. Frequent reasons for considering refinancing include:

· Lowering monthly mortgage repayments
· Consolidation of outstanding debts;
· Reduction of mortgage or loan interest paid to a lender
· Reduce the term of the mortgage or loan
· Earn equity sooner.

These are not the only purposes a homeowner might have when considering refinancing but they are among of the most common. They have been listed to assist the homeowner in beginning the evaluation process. You may conclude your refinancing goal falls within one of these categories. Likewise, you may realize you have an distinctly different objective. Once again, figuring out your purpose for refinancing is the most important aspect. If you do not decide why you are refinancing, you , or your financial advisor, will be unable to chose a refinancing option appropriate to your needs.

Refinancing Expert Consultation

The next step after you have determined what your ultimate goal with refinancing is, is to have a consultation with a refinancing expert. The expert will offer advice on which options will satisfy your goals while still remaining fiscally responsible.

It is not recommended that you forego a consultation with a refinancing expert, even if you consider yourself knowledgeable about the refinancing market. There is a wide selection of offers available on the market. A homeowner, however educated he or she may be about the subject, may not be informed about the latest products or concepts lenders are presenting.

Refinancing May Not Be the Best Solution

If you are thinking of refinancing, you will have researched the options available and determined your end goal. Sometimes, however, the best course of action is to not refinance. You should always explore this thoroughly before committing yourself to refinancing. This is known as the “do nothing” option because it is associated with where your mortgage circumstances will stand if nothing changes.

There are several items you should evaluate when you investigate potential refinancing options. These are:

· Estimated amount of monthly payment;
· How much interest you will pay over the life of the loan;
· The length of time (i.e. years) it will take to repay the loan; and
· How long it will take for you to recover the refinancing closing costs.

You should compare amounts from the above items with the costs of your present mortgage. This may help you to decide which plan is best. While most often these answers will make the obvious choice apparent, you may have to further assess lesser features as well to come to a conclusion.

By: Myron E. Hunter

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