| By :
Paul Wise
Before you say, "I want to refinance my mortgage," you must understand that refinancing has many fees and can cost you a lot in the long run. It is not recommended to refinance a mortgage if you plan on using the proceeds to buy a car, go on vacation or get that new entertainment system. A mortgage refinance is a smart choice when it can be used to save you money such as to consolidate your debt and pay less mortgage interest rates. If you think you would like to move forward, go out and find mortgage interest rates by different lenders on mortgage refinances. Now you must add up all the fees and see if between the extra fees and the spread between your interest rate and the rate of the refinance how long it will take you to break even and make a profit from taking the refinanced loan. For example if your interest rate now calls for you to pay $1500 a month, and the refinanced loan calls for you to pay $1400 a month but has a closing fee of $3000 it will take you 30 months before you begin to realize a savings on your loan. Because of the above example you must make sure that the savings is significant or the fees will eat you up. Once you are sure you are ready to "refinance my mortgage," you must know what type of mortgage you would like to get. There are quite a few types of mortgages but the big two are fixed interest rate mortgages and adjustable rate mortgages. No matter how enticing an adjustable rate mortgage is, a fixed interest rate mortgage is the right choice nine out of ten times. This is because the rate on the adjustable rate mortgage can change at any time where with the fixed rate mortgage you will always know your monthly payments. You may have to pay 5.5% on your fixed this year as opposed to 4.75% on the adjustable, but in a few years it is very possible and even likely that you would still pay 5.5% on your fixed but well over 10% on the adjustable. You should shop around for the best deal and write them all down so you can do a cost/benefit analysis to see which I any mortgages you should take on. You should also read the fine print of the contract because there can be penalties or the most ridiculous of things such as paying early, and remember, deals come and go. Don't be rushed by an over pushy salesman looking to make his commission. Stay cool headed and don't be afraid to ask for advice!
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