Do’s and Don’ts Of A Florida Refinance

Due to the low interest rates we’ve had in the last couple of years, many homeowners have seen benefit and refinanced their homes. If you have a home and are considering a Florida refinance or a home refinance anywhere else, doing so may be of benefit for you as well. However, before making that choice, ask your self “Should I refinance my Florida home?”, as there may also be a downside to refinancing, no matter where you live.

When Is Refinancing A Good Idea?

Lower Interest: The first step is to see if you will qualify for a lower interest rate. The best time to even look at doing a Florida refinance is when the interest rates have dropped by some major points or if you qualify for an interest rate that is much lower than when you originally purchased your home. When you are able to get a lower interest rate your mortgage payments are lowered. Then if you take the money that you save on your payment and roll it back into you’re your new loan, it is possible to pay the balance of your 30 year mortgage down to a 15 year mortgage. This means that you will have the same payment for a much shorter period of time, which saves you a lot of time and money.

You’ve Got An Adjustable-Rate Mortgage Now, And You Want To Move Into A Fixed-Rate Mortgage: It’s also a good idea, in general, to refinance if you’ve currently got an adjustable rate mortgage that’s about to skyrocket upward in interest, and you want to get into a fixed-rate mortgage. A fixed-rate mortgage is almost always a better deal than an adjustable-rate mortgage, unless you don’t plan to be in your home for more than about five years. By exchanging your adjustable rate mortgage for a fixed-rate mortgage, you’re guaranteed that interest rate for the life of your loan. And that is usually a huge money saver for you.

When Is It A Bad Idea To Refinance?

When Your House Is Almost Paid Off: Even if interest rates are really low, it is never a good idea to use a Florida refinance if you’re almost done paying off your home. Your equity can be lost during a Florida refinance and when you are almost done paying for your mortgage, almost all of your payment is going towards principle, so the interest rate is insignificant. You are better off to make your payments on time and keep your current mortgage until the house is paid off because it gives you more freedom and opens other possibilities.

When You Just Want Money To Spend On Other Things: A Florida refinance should not be a way to gain access to “free money” from your equity. You shouldn’t take money from your home to spend in other ways that might not be necessary. There will be a couple of thousand dollars in closing costs and your mortgage payments start going to interest for the first part of your refinance, so you gain little equity back during a Florida refinance. If you can save money with a much lower interest rate by refinancing, you can always shorten your mortgage by putting the payment difference towards principle, but this should only be considered if money is needed for important purposes.

Your Credit Score Has Dropped Since Purchasing Your Home: If you have run into some financial hard times and your credit score has taken a hit, then you definitely do not want to consider a Florida refinance. Stay with your current mortgage, because your credit score is lower you are considered a poorer risk, which means that if you try to refinance you will be charged an even higher rate, as well as higher closing costs. So stay with what you have, it’s the better deal.

Monika B. Grashoff specializes in mortgage loans. Looking for more information on FL refinance?, then simply visit www.Fl-Refinance.biz to also find our about florida refi savings.