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Determining the time to refinance a mortgage

As mortgage rates remain low, Delaware homeowners may be considering refinancing. There are several factors that weigh into the decision to refinance including timing, whether the mortgage has been refinanced in the past and the homeowner's financial status. Experts agree that it is not a good idea to refinance a mortgage more than once. This is because each time the mortgage is refinanced, closing costs are added that can erode the potential savings from reduced interest rates.

To determine whether or not to refinance, it is important to consider the goal. For example, the most common reason that individuals refinance their mortgages is to reduce the cost of interest. Other individuals choose to refinance as a means of consolidating debt such as combining a home equity loan with a first mortgage. Another common reason is to extend a mortgage from 15 to 30 years, for instance, in order to reduce the monthly mortgage payment.

There are some good reasons to choose not to refinance a mortgage such as a poor credit rating or plans to sell the residence in the near future. If a person decides not to refinance due to credit issues, it might make sense to work on improving his or her credit rating and then refinance at a later date.

A real estate lawyer may evaluate a potential agreement to refinance a mortgage to ensure that the lender is abiding by Delaware statutes to protect the interests of the borrower. If there are any inconsistencies, errors or omissions in the documentation, the lawyer may arrange to have those corrected or changed before the borrower signs any loan agreements.

Source: Bankrate.com, "When to refinance your mortgage", Don Taylor, November 25, 2014

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