Re-Financing A Home
Considering re-financing our home may have a wealth of options available to us. However, these same homeowners may
find themselves feeling overwhelmed by this wealth of options. This process doesn’t have to be so difficult though.
Homeowners can greatly assist themselves in the process by taking a few simple steps. First the homeowner should
determine his refinancing goals. Next the homeowner should consult with a re-financing expert and finally the homeowner
should be aware that re-financing is not always the best solution.
Determine Your Goals for Re-Financing
The first step in any re-financing process should be for the homeowner to determine his goals and why he is considering re-
financing. There are many different answers to this question and none of the answers are necessarily right or wrong. The
most important thing is that the homeowner is making a decision which helps him achieve his financial goals. While there
are no right or wrong answer to why re-financing should be considered there are, however, certain reasons for re-financing
which are very common. These reasons include:
* Reducing monthly mortgage payments
* Consolidating existing debts
* Reducing the amount of interest paid over the course of the loan
* Repaying the loan quicker
* Gaining equity quicker
Although the reasons listed above are not the only reason homeowners might consider re-financing, they are some of the
most popular reasons. They are included in this article for the purpose of getting the reader thinking. The reader may find
their mortgage re-financing strategy fits into one of the above goals or they may have a completely different reason for
wanting to re-finance. The reason for wanting to re-finance is not as important as determining this reason. This is because a
homeowner, or even a financial advisor, will have a difficult time determining the best re-financing option for a homeowner
if he does not know the goals of the homeowner.
Consult with a Re-Financing Expert
Once a homeowner has figured out why they want to re-finance, the homeowner should consider meeting with a re-
financing expert to determine the best refinancing strategy. This will likely be a strategy which is financially sound but is also
still geared to meeting the needs of the homeowner.
Homeowners who feel as though they are particularly well versed in the subject of re-financing might consider skipping the
option of consulting with a re-financing expert. However, this is not recommended because even the most educated
homeowner may not be aware of the newest re-financing options being offered by lenders.
While not understanding all the options may not seem like a big deal, it can have a significant impact. Homeowners may not
even be aware of mistakes they are making but they may here of friends who re-financed under similar conditions and
receive more favorable terms. Hearing these scenarios can be quite disheartening for some homeowners especially if they
could have saved considerably more while re-financing.
Consider Not Re-Financing as a Viable Option
Homeowners who are considering re-financing may realize the importance of evaluating a number of different re-financing
options to determine which option is best but these same homeowners may not realize they should also carefully consider
not re-financing as an option. This is often referred to as the “do nothing” option because it refers to the conditions which
will exist if the homeowner does not make a change in their mortgage situation.
For each re-financing option considered, the homeowner should determine the estimated monthly payment, amount of
interest paid during the course of the loan, year in which the loan will be fully repaid and the amount of time the
homeowner will have to remain in the home to recoup closing costs associated with re-financing. Homeowners should also
determine these values for the current mortgage. This can be very helpful for comparison purposes. Homeowners can
compare these results and often the best option is quite clear from these numeric calculations. However, if the analysis
does not yield a clear cut answer, the homeowner may have to evaluate secondary characteristics to make the best possible