What to Consider When Refinancing Your Wisconsin or Illinois Home Mortgage
Posted by madisonmortgage on February 26th, 2010
When should you refinance your Wisconsin or Illinois home?
Refinancing can be worthwhile, but it does not make good financial sense for everyone. A general rule of thumb is that refinancing becomes worth your while if the current interest rate on your mortgage is at least 1 percentage points higher than the prevailing market rate. That is a good rule but not always the determining factor.
There are several reasons to refinance your Wisconsin or Illinois home:
1. To lower the interest rate on your mortgage, reducing your monthly payments
2. To reduce the term or length of your loan
3. Consolidate your debt
4. To draw on the equity built up in the house to get cash for a major purchase, vacation, business venture etc.
5. Have an adjustable rate mortgage (ARM) and want a fixed-rate loan to have the certainty of knowing exactly what the mortgage payment will be for the life of the loan
It is better to refinance if you can get an interest rate at least one percentage points lower than what you are currently paying. However, every situation is different. Most people would consider a savings of $100 or more a month to be worthwhile too. Here are some things to consider:
1. How much can I lower my current monthly payment?
2. How much will I pay in refinancing costs?
3. How much will I still owe on the house?
4. How much am I currently paying each month?
5. How much did I initially pay for the house?
There are other considerations, too, such as how long you plan to stay in the house. It is said that it takes at least three years to realize fully the savings from a lower interest rate, given the costs of the refinancing. Itemize all the expenses of the refinance and estimate your new monthly payments. Answering these questions can help you to decide if you should refinance. View our refinance calculator to find out how much you will save by refinancing your loan.
For additional refinance information visit out Refinance page on our website.
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