If you currently are paying off a home loan or other mortgage, you have probably heard a lot of information about how now is a great time to refinance your property and save yourself a good deal of money on your payments. While it is true that the incredibly low interest rates currently on offer make refinancing a good option for some people, the truth is that the decision to refinance depends a lot on your current loan and financial status and refinancing may not be beneficial for everyone. Deciding whether or not to refinance your current mortgage is a huge decision, but luckily for you, we have produced this guide which should make it easier to decide whether or not refinancing your current mortgage is the right decision.


One of the first things you need to consider when thinking about refinancing is whether your current loan is fixed rate or variable rate. If you have a variable rate loan, then refinancing may indeed be your best option. However, if your current finance rate is fixed, then you will have a bigger decision to make. The majority of fixed rate mortgages have built-in penalties that make it not worth it to refinance. So, if you have a fixed rate mortgage, the first thing you need to look at is the extra exit costs associated with your mortgage. In most cases, these exit fees are quite high and will cancel out any possible benefits of refinancing. Still, if the exit costs built-in to your current mortgage are low, then it still might be worth refinancing, but you’ll need to carefully weigh the costs against the benefits.


The next step when deciding whether or not to re-finance is to look at your current term. Due to the low current interest rates, it is often possible to actually keep your current payment structure the same, while reducing the term of your mortgage. For example, many people have recently been able to reduce a 30 year mortgage to a 25, 20, or even 15 year mortgage without any changes to their monthly payments. By doing this, you could possibly save yourself thousands of dollars in interest payments and actually pay off your home or property in many fewer years than you could with your current terms, so it’s well worth looking into.

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