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With the run on low interest rates we’ve had in recent years, millions of homeowners have taken advantage of this and refinanced their mortgages. That can be to your great advantage, of course, but there are also some drawbacks to doing that. Let’s take a look at this in more depth, so that you know the answer to the question, “Should I Refinance My Florida Home?” or in any location for that matter.

Knowing When To Refinance

Lower Interest: The first step is to see if you will qualify for a lower interest rate. The best time to even look at doing a Florida refinance is when the interest rates have dropped by some major points or if you qualify for an interest rate that is much lower than when you originally purchased your home. When you are able to get a lower interest rate your mortgage payments are lowered. Then if you take the money that you save on your payment and roll it back into you’re your new loan, it is possible to pay the balance of your 30 year mortgage down to a 15 year mortgage. This means that you will have the same payment for a much shorter period of time, which saves you a lot of time and money.

When You Can Get A Fixed-Rate Mortgage Instead Of An Adjustable-Rate Mortgage: If you have an adjustable rate mortgage, you may have negative amortization that is making your principle balance go up and it is possible you may be entering the period where your interest rate is going up. A Florida refinance can allow you to get a fixed monthly payment on a lower interest, fixed-rate mortgage. A fixed-rate mortgage is better for those that plan to stay in their home for five years or longer because you’re guaranteed lower interest for the life of your loan, which can save substantial amount of money over the term of the mortgage.

When Is It A Bad Idea To Refinance?

You’re Almost Done Paying For Your House: It’s not a good idea to refinance your home (even if interest rates are really good) if you’re almost done paying off your home. You lose all your equity if you do a FL refinance, and have to start all over. That’s because every year you pay off your mortgage, less of your payments go toward interest, and more of them go toward the principal. So stay with your current mortgage if you’re almost done paying for your house.

You Just Want Some “Extra Money”: Be careful with trying to use refinancing as a way to get “free money” in this way, because you could end up in a quandary. For one thing, it’s going to cost you something to refinance, usually a couple of thousand dollars in closing costs at least. And for another thing, as stated above, you are going to be “starting over” with your mortgage payments in that you’re taking out a brand-new mortgage and paying off the old one at the same time, so that you’re going to be making most of your payments toward interest, not principle. Again, this isn’t necessarily a bad thing if it’s going to get you a much better interest rate and save you a lot of money so that you can shorten your mortgage anyway, but it’s not something to be used frivolously just to have some extra money.

You Had Better Credit When You Bought Your Home: If you had better credit in the past than you do now, you probably won’t qualify for the best mortgage rates, when you attempt a Florida refinance. If you are able to get your mortgage approved, you may pay a higher interest rate and put yourself through unnecessary hassles to get approved. If you are a poorer credit risk now than you were when you bought your home, continue to pay your current mortgage on time and attempt to improve your credit score so you will qualify for the best interest rates, if you attempt a Florida refinance at a later time.

Monika B. Grashoff specializes in mortgage loans. Looking for more information on FL refinance?, then simply visit www.Fl-Refinance.biz to also find our about florida refi savings.