Mortgage Refinancing Loan

Due to the low interest rates we’ve had in the last couple of years, many homeowners have seen benefit and refinanced their homes. If you have a home and are considering a Florida refinance or a home refinance anywhere else, doing so may be of benefit for you as well. However, before making that choice, ask your self “Should I refinance my Florida home?”, as there may also be a downside to refinancing, no matter where you live.

When Is It A Good Idea To Refinance?

You Qualify For A Lower Interest Rate: It’s generally a good idea, for example, to do a FL refinance if you either qualify for a much lower interest rate than you did when you bought your home, or if interest rates have dropped significantly compared to when you bought your home. By refinancing, you’ll significantly reduce your mortgage payments, and by “rolling the difference” into your new mortgage, you could conceivably cut the balance of your 30 year mortgage down to a new, 15 year mortgage with about the same mortgage payments monthly. That saves you both time and money.

You’ve Got An Adjustable-Rate Mortgage Now, And You Want To Move Into A Fixed-Rate Mortgage: It’s also a good idea, in general, to refinance if you’ve currently got an adjustable rate mortgage that’s about to skyrocket upward in interest, and you want to get into a fixed-rate mortgage. A fixed-rate mortgage is almost always a better deal than an adjustable-rate mortgage, unless you don’t plan to be in your home for more than about five years. By exchanging your adjustable rate mortgage for a fixed-rate mortgage, you’re guaranteed that interest rate for the life of your loan. And that is usually a huge money saver for you.

When Is It A Bad Idea To Refinance?

You’re Almost Done Paying For Your House: It’s not a good idea to refinance your home (even if interest rates are really good) if you’re almost done paying off your home. You lose all your equity if you do a FL refinance, and have to start all over. That’s because every year you pay off your mortgage, less of your payments go toward interest, and more of them go toward the principal. So stay with your current mortgage if you’re almost done paying for your house.

When You Just Want Money To Spend On Other Things: A Florida refinance should not be a way to gain access to “free money” from your equity. You shouldn’t take money from your home to spend in other ways that might not be necessary. There will be a couple of thousand dollars in closing costs and your mortgage payments start going to interest for the first part of your refinance, so you gain little equity back during a Florida refinance. If you can save money with a much lower interest rate by refinancing, you can always shorten your mortgage by putting the payment difference towards principle, but this should only be considered if money is needed for important purposes.

Your Credit Score Has Dropped Since Purchasing Your Home: If you have run into some financial hard times and your credit score has taken a hit, then you definitely do not want to consider a Florida refinance. Stay with your current mortgage, because your credit score is lower you are considered a poorer risk, which means that if you try to refinance you will be charged an even higher rate, as well as higher closing costs. So stay with what you have, it’s the better deal.

Monika B. Grashoff writes about refinancing. To learn more about FL refinance, stop by www.Fl-Refinance.biz where you can find out all about savings with a florida refi.

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