Although it may seem to be a good idea, mortgage refinancing is not advisable at all times. You might be wondering if now is the right time to refinance your home. Well, it depends on your needs and mortgage goals.

Refinancing works well under the following situations:

• You want to consolidate your two debts into one. Merging two mortgages and refinancing them into one mortgage is possible if the property has enough equity. That way, your new monthly payments will be lower than the combined payments on the two mortgages.
• You want to pay off your mortgage early. You can make your loan payment term shorter so that it won’t take you many years to pay off your mortgage. That means you can be freed from debt in a shorter time or even half the time of your original loan term. Refinancing for this purpose means increasing your monthly payments, and this will save you more in overall payment of the interest.
• You plan to save more. You can have your loan term extended to reduce your monthly payment. Although this will make you pay higher interest for entire loan, you can get more savings monthly with an extended term.
• You need extra money to pay off your credit card debts. Got enough home equity? Then you can borrow more money than your present loan balance. That extra cash you can use to pay off your credit card balances and other high-interest debts.
• You plan to change your adjustable rate mortgage into fixed rate mortgage. Instead of paying off variable amounts monthly for the entire loan term, you can change your mortgage type by shifting into stable loan repayments. Such a move will enable you to lock in at a low rate.

On the other hand, refinancing is a bad decision under the following circumstances:

• Only a few years are left on your current loan. There’s no point in refinancing your mortgage to extend your loan term. It’s because you might have to pay more for the whole loan term if you refinance to get extra cash.
• You have been paying off your current loan for many years. Refinancing to a longer loan term will only increase your overall mortgage payment.
• The value of your property has decreased. Refinancing is a wrong move in this situation because your original loan may be higher than the refinanced amount. Your new loan might not adequately cover the existing mortgage loan.

To sum it up, mortgage refinancing can be a good or bad decision depending on your current situation. So assess your situation carefully so that you can determine if refinancing is right for you.