Are you 50 years of age or a little older? Do you want to refinance your mortgage? Do you think this is a good time because of the interest rates?
Before you head off to the bank or loan office to start the paper work on this refinancing, stop. Answer and consider these questions first.
1. What is the current interest rate? Currently, it is 4% to 6% on most 30 year home mortgages.
2. What is your home’s value?
3. What type of neighborhood do you reside? Have there been a lot of foreclosures in your area?
4. How is your credit score? The closer to 720 you have on your credit rating, the better interest rate you can get.
5. Are you planning on moving in the next 3 to 5 years? Estimates say that it will take you 3 years to pay for the closing costs on a home.
6. Will you have to work longer hours to pay for the cost of refinancing?
7. Have you recently refinanced? If you have, you are all ready paying extra closing costs and finance charges.
What should you do if you still want to refinance after answering and considering the above questions?
• Consider refinancing for 15 years instead of 30 years.
• Do not invest your new savings into the stock market. Although, some people believe that the economy is getting better, the stock market is still shaky. You want to be very careful on what you do with your money.
• Consider paying down some of your debt, especially any high interest debt you may have
• Consider making any big home improvements that need to be done before you actually retire
Hopefully, the economy will soon recover and real estate prices will rise. Until they do, make smart choices and consider all angles before you make any big money decisions, including refinancing your home.