To determine whether you should refinance your home, says MoneyWatch.com's Jill Schlesinger, investigate these three areas: your credit score, your home equity, and whether you can actually save money.
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>> Unknown Speaker: One of the upsides of the financial meltdown has been the significant drop in mortgage interest rates. So is it time for you to refinance?
music It's important to remember that the easy credit years of the housing boom are way over. The era of a heartbeat and signature qualifying you for a whopping mortgage is so 2005. Today you'll need considerably more documentation, not to mention very good credit scores, in order to refinance. Despite the extra hoops, it still may be worth it for you if mortgage rates are low enough or if you need to lock in an adjustable rate. Before you set out to refi, ask yourself three questions. One, is your credit score high enough to qualify for a low rate? Two, do you have enough equity in your home? We have returned to the standard twenty percent in almost all circumstances. And three, will refinancing actually save you money? If you don't plan to stay in your home long enough to recoup your closing costs, you may be better off sticking with your existing loan. There are few upsides to a nasty recession. Low mortgage rates are one silver lining that can help you save big dollars.
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