subject: Mortgage-Refinance: The Options [print this page] Mortgage-Refinance: The Options Mortgage-Refinance: The Options
There are many options to consider when refinancing. Is your goal to have lower interest rates or lower monthly payments, or perhaps both? If your goal is to have lower monthly payments, you can extend the time of your loan through refinancing, but it will take you longer to pay the house and thus, you will be paying more interest overall. However, you can try to get a lower interest rate to try and combat the extra amount of interest you will be paying. You can either wait until the interest rate in the housing market drops, or you can build up your credit to be able to qualify for a lower interest rate. Building up your credit before you refinance will take time, but could really be worth it in the end.
If you initially took out two mortgages, then one will most likely be tied to a much higher interest rate. If you have been able to pay off a big chunk already, refinancing to put both those mortgages on one mortgage with one lower interest rate will also most likely save you a lot of money. If you are already on an adjustable interest rate, you can refinance to a better adjustable interest rate with better terms and therefore, one that saves you a lot in interest if you do your homework and are able to find one. You can also refinance from an adjustable interest rate to a fixed interest rate if the interest rate drops really low.
If you can afford higher payments, you can also shorten the term of the loan so that you are paying mostly principle, and not near as much interest. This will dramatically cut down on how much interest you end up paying since you will be able to pay off the loan much faster. Always check, however, with your current loan to see that you will not be penalized for paying off your loan early.
