You have to pay around $3000-$4000 for the refinancing process and closing costs. You have to decide if you can break even in a short period of time and benefit from refinancing. If you’ll be living in your home for a long time then you should refinance because you have plenty of time to break even the cost and save money. You have to ask yourself a few questions before you refinance. The goal is to benefit from savings. If you can’t benefit from saving then you should not refinanced. The process of refinancing is costly. Interest rate seems to rise more than falls so you should take advantage of it if it’s low.
When you have decided to refinanced, you can begin to search for a lender that will have the best rate for you. All mortgages are different and all lenders charge you differently too. It’s good to stick with your current lender so that you can lower your administrative cost. The administrative cost is high and your lender might have some of your paper work on hands and you don’t need to pay for new ones. They know about your work and credit situation. You can try a new bank but you might not save a lot after all the cost adds up. If you do find a lender that offers you a low interest rate then you should refinance with them. It’s wise to shop around before you decide to refinance.
What can you benefit from refinancing? When you refinance, you can change your interest rate, change your loan term, change from a fix rate to an adjustable rate or vice versa, to borrow money, and consolidate debt. Homeowners can also combine two mortgages together. You can change the years on your loan to a shorter term or longer term. You can change from an interest rate only mortgage to a mortgage that allows you to pay down the balance. You should remember that refinancing is a costly process.