How Do You Know When It's Time To Refinance Your Mortgage?

You're the only one who can really determine if refinancing will be a smart financial move to make, so it's important to understand when it's the most appropriate option.

Here are five of the most common reasons people choose to refinance:

1. Interest rates have dropped below your current mortgage rate, and you want to lower your monthly payment.
2. You want to lower the total cost of your loan by reducing the term. Let's say your current mortgage rate is 10.25% for 30 years and you refinance at 8.25% for 15 years. You may see an increase in your monthly payments, but over time you'll save thousands of dollars in interest payments. Homeowners can choose from more loan options today than ever.

   If you're wondering which option makes the most sense for your situation, you can easily find this information online. One great tool is the Loan Advisor, offered by National City Bank. This tool walks you through a number of questions designed to assess your goals, and then offers an objective overview of options that may work best for your given situation. The site also provides a ton of valuable information regarding the loan process, loan types, calculators and other tools at http://www.nationalcity.com/personal/mortgage/loans.asp

3. You have an Adjustable-Rate Mortgage (ARM), and rates are on the rise. Homeowners who find themselves in this situation will want to lock in at a fixed-rate. Some ARMs come with a no-charge, lock-in feature. If yours doesn't, you may have to refinance to get a fixed rate.
4. You want an ARM with better features than your current loan. As the mortgage market changes, you may decide to move to an ARM with more flexible features. Know the limits on exactly how much your existing interest rate or monthly payments will increase, so you can make an informed decision.

5. You want to consolidate debt. If you have enough equity in your home, you might consider consolidating your mortgage and other high-interest debts, such as credit cards or installment loans.

If you find yourself falling into any of these categories, this could be the right time to refinance your home. Remember to always do your homework before making any major financial decisions and good luck!

Content provided and sponsored by National City Corporation. ©2002 National City Corporation. Banks are Members FDIC. This site is protected by copyright and trademark laws under U.S. and international law. Review our privacy notice. All rights reserved.