Refinancing Your Home

The dos and don'ts of home mortgage refinancing

Dreams of refinancing dance in the heads of homeowners the way sugarplums once did in the dear little heads of children of old. The promises of smaller payments and building more equity have obvious appeal to any homeowner, but the variables involved in refinancing your home make things slightly more complicated than simple addition.

Crunching numbers

The quickest and easiest way to get a handle on the costs and potential benefits of refinancing your home is to use a mortgage calculator. Nearly every reputable lender offers mortgage calculators online so that existing and potential borrowers can experiment with refinancing. ( Smaller lenders, such as credit unions, may not have online mortgage calculators, but they have the software to do it for you. You just have to ask.) Simply gather the following information and enter it into an online mortgage calculator:

Information about your existing loan (interest rates, remaining balance, etc.)

Specifics of your new loan (new interest rate, closing costs, etc.)

Personal financial information (savings, other debt, etc.)

Your property's value

Ever-fashionable trends

Forget about the runways of Milan. Real estate trends are the ones you want to watch when considering refinancing your home. It's not as simple as looking at federal interest rates and what the top home mortgage lenders are offering. You have to consider property values and trends in your state, your city, even in your neighborhood. Interest rates may be lower in some areas based on the flourishing or floundering local real estate market.

Devils in the details

Don't forget to factor in closing costs and other fees tied to any new loans and the potential tax benefits of refinancing. These costs are often tax deductible. Together, all of these aspects paint the picture of your mortgage situation. Of course, if it's still unclear, a financial advisor will be happy to clear the air and bring things into focus.

More information on mortgage refinancing