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How to Refinance a Land Contract | eHow.com

How to Refinance a Land Contract. Refinancing a land contract or agreement for deed, is fairly simple. A land contract operates just like an ordinary bank loan, except payments ...

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When Refinancing Your Home Mortgage May Not Be the Answer

While many homeowners could potentially benefit from refinancing their home mortgage, it is also possible that a refinance would only dig you deeper into debt. This article will focus on the signs you can look for that can tell you whether it might actually be a bad idea to refinance your mortgage.

Many homeowners who are experiencing trouble staying current with their mortgage payments may be considering a refinance opportunity, which simply means that you will work with a different bank (or perhaps even the same bank) to take out a second mortgage with different terms so that the payments are typically smaller and you can afford to stay current.

However while refinancing your home loan may seem like an attractive opportunity when you are faced with the risk of foreclosure, there are costs involved in this process and many considerations that you should take heed of as a prerogative of financial responsibility.

There is a typical rule of thumb when it comes to refinancing a mortgage which is that you should not refinance unless the interest rate of your new home loan is 2% less or lower than the interest rate on your current home loan. Depending on your situation you may or may not need to use this basic rule to make your decision.

If you are considering refinancing your mortgage in order to simply take advantage of a potentially lower interest rate and lower payments, but are having no trouble making your current mortgage payments on time, then it would be wise of you to follow the two percent rule.

If however you are at risk of defaulting of your mortgage and would face the prospect of foreclosure, then you may want to subvert this rule and refinance to a mortgage with a longer period of time so that your monthly payments can be lower.

Remember that even if you are refinancing you are still taking out a brand new loan, and so you will have the typical closing costs associated with that action. If you are working with the same bank from which you got your first loan then they may be willing to waive some of the costs. This is definitely something you should ask about, because the worst thing they can say is no.

When you are seriously considering the option of refinancing, especially if you are feeling the stress of having to avoid foreclosure, make sure that you do not get caught up in the stress and remember the costs and pitfalls associated with getting a new loan.

Nathan Navachi is an expert in the mortgage industry and specializes in mortgage refinancing information. You can read more of his expert advice at MortgageRefinancingSolution.com

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