The telemarketing calls, billboards and radio radio spots all advertise to refinance your mortgage rate before it is too late. Is this all just hype and marketing to get you to call, or is there a true need to get that interest rate and mortgage payment lowered. Let me help uncover some of the facts about refinancing your mortgage.

First of all, there has to be a long term benefit to outweigh any short term costs involved with refinancing.

A good rule of thumb in the past was if the current interest rate could be lowered by 1% or more, then it usually made sense to look into refinancing. Today, with loan balances being low, mortgage insurance premiums going up and equity issues in the home, that past formula may not be a good indicator.

There are usually 2 main reasons to refinance:

1. A straight forward rate and term refinance. This is when you are not looking to take any equity out of your home but just want to lower the current interest rate and possibly the length of the loan. This can be very beneficial in getting the payment lowered.

2. A Cash out refinance. This is when you want to cash out part of your equity of the home and use that money for other things, such as home improvements projects, paying down other debt or maybe taking that once in a lifetime vacation. These days equity is hard to come by with the current real estate market.

Should You Refinance?

It just really depends on your unique situation,

When I sit down with clients we discover if the refinance makes sense for all parties involved and then we either proceed with the refinance. During this discovery phase is when the advise from a professional licensed mortgage consultant can make or break a deal. Bad advice might force you into a refinance that will cost you money but provide no real long term benefit. Good advice might either save your hundreds of dollars a month in a payment or save you on closing costs.