This economic crisis is causing interest rates to drop significantly. Many of my friends have already refinanced or are thinking about refinancing their mortgages. We are thinking about it ourselves as well. Just talking to friends and family had me realize that we may qualify for refinancing and we should definitely look it more. After researching, I found out more about the process and the pros and cons to refinance.

Some of the benefits are that you will receive a lower interest rate, you can shorten the term of the mortgage, smaller monthly payments, or you extend the time to pay off the loan. You also have the option to change from an adjustable rate to a fixed rate as well so you have stable monthly payments. Some of the disadvantages are that if you do not plan staying in your house for a long time then you may not break even because of the high closing costs. If you extend the term of your loan, your monthly payments may be lower but you would be actually paying more in the end.

I found to determine if you should take the time to refinance you should look at your current loan and see how much difference the rate you have now compares to the current rate. I have read that you should not bother if the difference is less than 1%. You can use online interest rate calculators to figure how low the rate should be for you to benefit. You should find out what your bank has to offer and any legitimate affiliate partners to find the best rates. You should also have at least twenty percent of equity in your home.

In conclusion, I realized now is probably not the best time for us to refinance because we have only been in our home for less than two years and we do not plan on staying in it for a long time.