If you can better the terms of your mortgage and at the same time reduce the cost of borrowing, then it would be a good time to consider refinancing your mortgage. If you can do either, then refinancing might not be the thing for you right now.
There are many methods of improving the terms of your mortgage. Therefore, whether you choose to refinance your mortgage depends on what you plan to accomplish with refinancing. Here are some ways people can improve their mortgage:
Try to lose the PMI. Private mortgage insurance fees can cost you a lot of money monthly. If you can get rid of it, you can save a lot of money. You can do this if you can show that the value of your home is now worth more than eighty percent of your mortgage when you refinance. This will cause the PMI to go away. In the overall picture, people usually pay twelve percent on PMI instead of preferring to pay off that same rate on the mortgage itself.
Cutting down the time for payoffs. Your payoff period is normally part of the mortgage that you signed off on. Currently, the most common terms of a mortgage is either the fifteen year or thirty year term mortgage. However, you can significantly lower the cost of interest payments if you opt for a shorter term. In the long run, you save more money on payments even if your monthly expenses increase.
Lower your monthly payment. A lower monthly payment doesn't always equate to a better deal. It is possible to extend the terms of your mortgage and subsequently lower monthly payments but it costs more in the long run. However, if you can maintain the terms of your mortgage and lower your monthly payments
, then you get a much better deal. But then, if you can't afford to make your monthly payments, extending the terms of your mortgage will save you money by helping maintain a good credit score and preventing foreclosure.