Is it a good idea to refinance a mortgage?

[Administrator]

Forum: Budget Board Posted By: 2cutekids Post Time: 05-07-2008 at 01:30 PM.

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[Richardsmith]

Interesting thread,

The benefits of refinancing also depend on the age of your mortgage. The sole benefit of refinancing is to obtain a mortgage with a lower interest rate and save money on future repayments. If you purchase your home at a time when interest rates are high, refinancing once those rates drop can save you a large chunk of money.

Mortgage Refinancing is what usually financial experts recommend leveraging mortgage rates. It is fundamentally paying off your first mortgage and getting a second mortgage. Most borrowers who for mortgage refinancing do so to have immediate equity on the mortgage and to change loan type. Other reasons include taking advantage of improved credit ratings. But, the most popular reasons for mortgage refinancing is to obtain lower interest in the mortgage to lower monthly payments.

In some situations, refinancing is unlikely to help you pay off your mortgage faster or reduce your monthly mortgage repayments. For example, refinancing is almost never a good idea when your credit rating is worse than it was when you got your original mortgage. In this case, your lower credit score will usually mean you cannot get an interest rate that is favorable enough to lower the cost of the new mortgage enough to make refinancing worthwhile.