For most people, their home will be the biggest investment they make, and the associated mortgage will be the biggest debt they will have. Here's some tips on refinancing (or not) from the American Institute of Certified Public Accountants:
Refinancing Your Mortgage
With interest rates dropping as a result of the Federal Reserve's new program to purchase Treasury bonds and mortgage-backed securities, now may be a great time to refinance your home. Refinancing often benefits the homeowner by providing access to equity and a lower interest rate — which might mean lower monthly payments on your mortgage and more savings in your pocket. Before refinancing, consider the following:
- Reducing the life of your loan may cause your monthly payments to rise, but you will save on interest payments in the long-run.
- Extending the life of your loan can potentially lower your monthly payments, but make sure that your interest rate is simultaneously reduced.
- Refinancing may not be for you if a majority of your loan has already been paid off or your property has decreased in value.
Consult with a CPA or a financial advisor before making financial decisions such as these.
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