Refinancing means getting a new mortgage and using some or all of the proceeds to pay off the old mortgage. The opportunity to pay a lower monthly mortgage payment is usually the most attractive aspect of refinancing. Homeowners with an adjustable rate mortgage that fluctuates may seek a fixed rate mortgage. You can also decide to refinance to consolidate first and second mortgages. Refinancing can shorten the life of your loan. The monthly payments on a 15 year loan are considerably higher than on a 30 year loan with the advantage that the length of your payment responsibility is cut in half.

Because you usually refinance when mortgage rates are lower than those you currently are paying, you end up saving money. The logic follows that if you are paying less interest in your monthly mortgage payment, you will have more money to pay against the principle. This means you can potentially pay your mortgage off faster. In some cases, a lower monthly payment means that you will have less trouble carrying the mortgage and are less likely to default.

There is a load of fees to be considered in the refinancing process. Before you sign any documents,be sure to explore all of your options and understand all the fees that may be required. While you may save money on the interest rates, your budget may not have room for all the refinancing fees!

Your costs for refinancing will likely be some or all of these: a licensed appraisal fee; attorneys’

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