Does the low interest rates mean it's time to refinance your mortgage? ~ Pinoy Reviews

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Thursday, February 12, 2009

Does the low interest rates mean it's time to refinance your mortgage?

Those low mortgage interest rates seem tempting and some of you might consider refinancing your fixed interest rate mortgage. However, before you call your mortgage broker to refinance, think things over and consider these factors:

  1. Consider how long you're going to stay in your home. Refinancing usually means extending your loan payment terms. If you don't plan to stay in your home for the long haul, the closing costs alone will outweigh the low interest payments.
  2. Fixed rate or Adjustable rate. Most people refinance in order to get out of either of these two types of rate. Adjustable interest rates may be good for high interest rate environments while its the other way around in low interest rate environments. The market is still unstable these days and some are waiting for the rates to bottom out.
  3. Lower appraisals, higher equity needs. Home prices are still declining and some banks are raising their equity needs and in some cases, asking for upfront payment. You might end up paying more rather than saving more.

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