Refinance risk-free

In years past, conventional wisdom cautioned against premature or frequent refinance. The reasoning was that the market home mortgage rate would have to drop considerably for the savings to be worth all of the upfront costs that refinancing required. Now, new options have made it easier and cheaper to refinance, meaning that you no longer have to make grueling decisions based on market predictions.

So what are these new options?
Basically, the costs associated with refinancing no longer make the expense prohibitive.

Previously, borrowers were required to pay for refinancing upfront, in cash. So borrowers had to find a way to pay closing costs which may run anywhere from three to seven percent of the loan, as well as, all kinds of other fees, including those for applications and reappraisals.

Of course, these fees have not just disappeared. In fact, they haven’t really even been reduced. You simply no longer have to pay them upfront if you don’t want to. Instead, you might choose a loan that includes the costs in a higher home mortgage rate. As long as that rate is lower than your original mortgage, you are already on your way to savings. Alternatively, you can roll the costs into the principal of your new loan.

Either way, you don’t have to worry about recouping the refinance costs; as long as the home mortgage rate is lower, you will definitely save money. To take advantage of even the slightest drops in market home mortgage rates, you may elect to refinance as often as you want. While the process may require some added effort on your part, the residual effect, saving money, is always worth it.