“Refinancing” is a scary word for many people, but that shouldn’t be the case for you. For many homeowners, refinancing can not only lower your monthly payments and help with your monthly budget, but it can save you thousands of dollars in the long run.

Before you sign on the dotted line to increase or prolong your mortgage, consider the following:

  • Why are you refinancing?
  • If adding extra funds to the mortgage, what will the money be used for? Does it have a positive or negative effect on your net worth?
  • What will this do to your long-term financial goals?
  • How many years does this add to the mortgage?
  • What are the closing costs to refinance, including all application and set up fees, appraisal, and legal fees?
  • How long will it take to recoup your mortgage refinance costs? Will you remain in the house for at least that long?
  • Run an amortization schedule for your current mortgage, and one for a refinanced mortgage. Add the mortgage refinance costs to the total interest on the latter, and compare to what you’re set to pay in total interest on your current loan. Which one is more expensive?


For years now, we’ve been hearing that interest rates will be on the rise, and although there have been some increases, you’re still in a great position to drastically lower your interest rate. The general rule is if your mortgage interest rate is more than one percent above the current market rate, you should consider refinancing.


Don’t brush off refinancing just because it seems like a long and daunting process. An informational call with a lender to see how rates compare will only take a few minutes. There are also some programs for streamlining the application process. And besides, isn’t the amount of money you could save worth the time and effort?


Seeing your Adjustable Rate Mortgage (ARM) increase after the introductory period can be incredibly stressful and place a squeeze on your budget. Many people assume they’re stuck, but ARMs can be refinanced, just like fixed-rate mortgages. You can even switch to a shorter term fixed-rate mortgage, such as 15 or 23 years. The longer you’re planning to stay in the home, the more sense it makes to look into refinancing.