Evaluating Refinancing Your Mortgage

March 31, 2011

If you are like most people, your home is your most valuable financial asset and your mortgage is your largest debt. Consequently, periodically examining your existing mortgage and potential mortgage options makes sense. As part of this review, be sure to include several factors:

  • Interest rates - How does your current rate compare with those currently available?
  • Type of mortgage - Does your mortgage type (fixed or adjustable rate) fit your plans on how long you intend to live in your current home?
  • Monthly payments - Can you reduce your payments by refinancing or can you afford more?
  • Loan balance - If you have paid down your mortgage over time, refinancing the lower balance may reduce your payments even with the same interest rate. Do you wish to refinance with a higher balance to access equity you have built up to pay down other loans or for other purposes?
  • Costs of refinancing - You may incur expenses when you refinance. If refinancing with lower monthly payments is your objective, you should be sure that your monthly savings over a short period of time will offset any refinancing costs you may have.
  • Tax consequences - Interest paid on a home mortgage is usually tax deductible for those that itemize their deductions. Consult your tax advisor for more information.

Consider the Costs of Refinancing
As you analyze your refinancing options, be sure to factor in all of the costs that may be associated with the refinancing. You should recover those costs over a relatively short period with lower monthly mortgage payments.

A Refinance Calculator will help you determine whether refinancing your loan for a lower interest rate is a wise decision for you.

If you're determining whether refinancing is the right move, contact a Home Loan Specialist from Home Federal Bank to help you through the process.

Home Federal does Personal Banking, Business Banking, Ag Lending , Home Loans, Trust and Asset Management, and Investments. With so much to offer, learn what Home Federal can do for you.

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