By Barrett Niehus

Interest rates are at an all time low. Lower in fact than they have been in forty years. With this low rate comes huge opportunity for home owners to lower their payments and take some equity out of their home. The question about weather refinancing is necessary is dependent on your current financial situation, and what you will save versus how much refinance will cost. The analysis is a simple one, but one must understand process in order to benefit from refinance activity.

When weighing decision to refinance, one must simply look at your current monthly payment and your remaining payoff period. Then compare this to monthly payments and required payoff after refinancing activity. If benefit of refinancing outweighs cost of process, then refinance makes sense.

The easiest way to evaluate if a refinance makes sense from a quantitative sense is to list your current monthly payment amount left on your mortgage, and number of payments that you have left. Multiply number of remaining payments by your current monthly mortgage payment and list this under all of numbers.

By Barrett Niehus http://www.freetrainer.com

Rates on mortgages are lower than they have been in forty years. This provides a huge opportunity for new and existing home owners, but also carries risks that can have a substantial impact your ability to pay in future. Mortgage lenders are inundated with work, and it was recently reported on national news that “if you can breath, you can get a mortgage.” This phrase should at very least frighten average mortgage customer. It indicates that not only are mortgage companies finding new ways to make money off of their huge list of clients, but they are also circumventing risk analysis that avoids putting high risk customers into immediate credit trouble.

The opportunity is immense. For many home owners, monthly mortgage payments can be reduced by ten to fifteen percent through a refinance. For new home owners, they can afford to pay ten to fifteen percent more because of resulting low monthly payments. The benefits are substantial and if addressed properly, risks can be avoided.

The risk of course is choosing a form of financing with inherent uncertainties and putting your long term financial situation at risk. One of most popular mortgage products available today are variable (floating) rate mortgages. The mortgage rate varies with current Treasury rate until it is locked in at a set amount above future treasury rate three to five years after date of origination. Many mortgage customers are fond of this type of funding because it allows them to enjoy a very low rate for next three or five years. Unfortunately, risk involved with this type of loan is huge, and can have substantial impact on customer’s ability to pay.