To Re-Mortgage Or Not to Re-Mortgage, That Is The Question.

How To Decide Whether Or Not To Re-Mortgage.

Interest rates have been changing a lot lately, and it makes any of us wonder whether re-financing our homes is a good idea.

The decision whether or not to re-mortgage is not a cut and dry decision. There are many issues that may affect when and whether you should re-finance.

How you time your new mortgage can make a big difference, since there are frequently short spells in the market where interest rates fall briefly, and you can use this to your advantage.

But it is important to be sure that no matter what long term savings you gain outweigh the immediate costs of a new re-mortgaging package.

If you are able to negotiate a fixed rate loan, that would usually be considered more desirable than having an adjustable rate loan, exposing you to constant increases in your mortgage payments.

If you have been able to improve your credit rating since you took out your mortgage originally, you may be able to negotiate a better rate on the same mortgage.

If you do have a high interest rate mortgage, it will pay to watch the market rates to see if you can lower your interest rate.

Whether you want to or not, if you have a balloon mortgage, you will have to re-mortgage every five years, and so it may be to your advantage to use this timing to look around for better terms and rates.

An improved credit situation should automatically qualify you for more advantageous rates and even a longer maturity. If you have become tired of refinancing every five years, this will be a big relief.

If you have improved your credit rating, you may save further by re-financing and renegotiating a mortgage that does not require you to have mortgage premium insurance.

However, all of the above reasons for refinancing must be balanced by one very critical question: how much are the fees for refinancing? Most reputable lenders will be able to tell you exactly what the total costs for refinancing are, and you should be able to figure out what your savings from refinancing are. (Your current bank will give you balances due, expected monthly payments, etc.)

If these costs exceed or are even just equal to the total savings you will achieve, refinancing your home will not be worthwhile.
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