When to Consider Refinancing

There are times when it makes sense to refinance your mortgage. The decision, which should be based on your financial situation, is up to you. Here are some common things to consider:

1. Do you wish to lower your monthly payment? This can be accomplished by obtaining a lower interest rate, extending the term of your mortgage (i.e. from a 15 to a 30 year term), or obtaining an interest only loan.

2. Are you in an Adjustable Rate Mortgage (ARM)? ARM loans rise and fall with interest rates. They are often obtained as a short-term solution or during times when interest rates are high as they typically have a lower rate. If interest rates are low you should consider refinancing out of your ARM and locking in to a fixed rate loan.

3. Do you need cash from your home's equity? You may have equity in your home that you can access through a "cash out" refinance. You can use this money for any reason including to pay for home improvements, college tuition, or a down payment on a vacation home.

4. Could you benefit by consolidating your credit card debt? The equity in your home can also be used to pay off credit card debt. Once consolidated, your total payments will be lower and the interest paid may be tax deductible.

The information contained here is general overview and in not to be considered all inclusive. Deciding on when to refinance your mortgage will depend on your situation: how long you plan to be in the home, your financial goals, and whether interest rates are dropping or rising.
It is your decision whether refinancing is the right choice for you. As with any financial decision, be sure to check with your tax advisor.