Should I Refinance My Mortgage?

There comes a time when most homeowners ask themselves the question, Should I refinance my mortgage? The answer to that question is varies depending on your situation. The need to refinance, or alternatively take out a 2^nd mortgage, comes down to the characteristics of the 1st mortgage and your needs for obtaining new financing. 2^nd mortgages carry a higher interest rate than 1^st mortgages and that's the main reason why it is more popular to refinance the 1^st mortgage rather than go the route of taking out a 2^nd. However, 2^nd mortgages do have their place as the smart financing choice. Take a look at the following lists to help you determine what decision might be right for you.

If any of the following are true, it might be wise to refinance your 1^st mortgage rather than take out a 2^nd

• Current interest rates are lower now than they were when you originally obtained your 1^st mortgage
• By refinancing your first mortgage, you could remove private mortgage insurance (PMI)
• You need to refinance your first mortgage because it has an adjustable rate or is soon to adjust.
• You need a large amount of cash and the higher interest rate of a 2^nd mortgage is too expensive for your budget
• You would like to shorten the term of your first mortgage

If any of the following are true, it might be wise to take out a 2^nd mortgage rather than refinance:

• Current interest rates are higher now than they were when you originally obtained your 1^st mortgage
• The amount of cash you need from your refinance is minimal and the closing costs incurred from a standard refinance is too expensive (2^nd mortgages typically have much lower closing costs than a 1^st mortgage)
• You want the flexibility of a home equity line of credit to borrow money against your home when it's convenient
• You have a pre-payment penalty on your first mortgage but need cash out from your property now

As you can see, the choice between refinancing and taking out a 2^nd mortgage comes down to individual needs based on your current home financing and what you're looking to accomplish by obtaining new home financing. Speak to a BeatMyBroker.com mortgage professional if you are unsure about which option is best for you.