To Refinance, or not to Refinance; That Is the Choice

Mortgage refinancing is an easy decision if you consider your personal plans first, then use due diligence in researching loans offered by the best mortgage lenders.

Consider your personal goals affecting your home. These deliberations will influence the timing for refinancing which may dictate delaying, or else you will incur multiple and expensive closing costs.

• Is up sizing (more children?), or downsizing (college graduations?) in the picture?
• Are you considering tax benefits of investment property, through long-term investment or 1031 exchange?
• Realistically, will you use the monthly savings for a tangible benefit, such as investments, home improvement, IRA deposits, or to pay off other debts?

If all personal decisions point towards mortgage refinancing, you can benefit from a reduced interest rate. Some experts recommend that your new mortgage rate be 2% to make refinancing worthwhile. However, if you could get an even slightly lower rate at no cost, even a .25% interest rate reduction would be worth refinancing for. It all depends on what the fees are in relation to the savings involved. You interest rate reduction may need to be as little as .5% or .75% for worthwhile savings.

Easy refinancing formulas do not exist for the financial benefit of refinancing ARMs, which are often fixed for several years before concerting to an adjustable phase. It depends on what your rate will do when inflation enters the picture. That's a concern as since ARM ceilings are around 11%, with maximum increase during loan life of 6%, significantly above today's fixed rates. Determine what rate you need to make refinancing worthwhile, shop for a good lender, then lock and and close when rates hit your targeted range.

A mortgage refinance calculator can show you how long it will take to recoup closing costs and help you determine if refinancing is the right decision.You should seriously consider refinancing if these savings support your personal and financial goals. Use due diligence by contacting several mortgage lenders for their best mortgage rates and associated closing costs.