This week, the Palm State Mortgage Company Blog goes back to the basics in reference to a popular trend:  Refinancing!  To put it simply, a “re-fi” loan is actually new loan on your home, and it comes with new terms.  Usually people look at the option of refinancing in order to change the length of the loan.

Home owners also might consider this option if they want to secure a lower interest rate. You might go the refinancing route  if you are seeking equity from your home to position some ready cash for another venture.

Refinancing:  The Brass Tacks!

Option I:  Let’s say you desire building equity sooner and faster than you were permitted under the original loan.

“If you’re looking to build equity in your home sooner, you can refinance to a shorter term loan.”

Refinance with Palm State Mortgage for Peace of mind.

Refinancing can give your family peace of mind.

Quite often this means a 15 year loan could force you into making higher payments, but you would become the true owner of the home sooner by paying off the loan sooner.

Obviously, the home would cost less in the long run because you would pay less interest to purchase it.

Option II:  Conversely, if you wish to grab some available cash for another need, you would strive to do exactly the opposite.  You would refinance the loan for a longer term to lower your payments for each month.  Caution!  Don’t get so carried away by the lure of available cash that you forget you will be making payments for a longer time.

Likewise, the longer term means you will also end up paying more interest.

Refinancing:  Six Big Factors

Either one of the two refinancing options above are big decisions for you and your family budget.  At Palm State Mortgage, we want you to be aware of your mortgage situation, and to keep your options, such as refinancing, up to date.  So this blog lists several  factors you should consider as you view your mortgage papers with fresh eyes:

1.  What is your mortgage size at the present?

2.   How large would the new mortgage be, if you chose to refinance?

Palm State Mortgage salutes families who chose refinancing.

Refinancing can begin with a friendly fianancial discussion at Palm State Mortgage.

3.   What is the current market value of your home?

4.   What is the current interest rate of your loan?

5.   What is the new, proposed interest rate of the new proposed loan?

6.   What will be the amount of the closing costs of refinancing the home?  (You see, refinancing is not a “free” procedure!)

To help you synthesize these top six factors into a decision to refinance or not, many online sources have a refinance calculator.

Check out one at Smart Asset:   You could also investigate some of the refi-related tools at Trulia, where you’ll find tips on

how to prepare financially for a refinance loan.

The Sweet Spot:  What Will a Refinancing Calculator Show You?

A refinance calculator will show you the math between keeping your old mortgage and getting the new one.  Then you have the data you need to make a decision.

The sweet spot of refinancing situation is “the point when the monthly savings of the new mortgage become greater than the up-front costs of refinancing.

In other words, how long will it take you to recoup the fees you paid to do the refinance?”

So, now you must consider how long you plan to stay in the house!  If you are going to sell your house soon, refinancing might not be your best option.

Next week Palm State Mortgage will bring you more pros and cons that will help you decide what is best for you:  To Refi or Not to Refi?