Consider the fees when refinancing

When deciding whether or not to refinance your mortgage, you have a lot of things to take into account.

One of those things is the fees.

It is possible that just looking at the interest rate would make it seem like an obvious decision. "Well, the interest rate you signed in on previously is so high, and has since come down 3 full points". It seems like a no-brainer. You refinance and are set to save tons of money.

That might be true, but you need to find out what types of fees are involved in refinancing. Early payment of the original mortgage might include some hefty fees and even fines, depending on the mortgage.

It is possible that the fines and fees may be great enough that it will balance out the savings of the lower interest rate.

Make sure you include any fees and fines in your equation when trying to make the decision.

Inactive credit cards affect your credit rating

To get good mortgage financing you have to have good credit.

The first way to have good credit is to make sure you always pay your bills on time, at least the minimum payments (such as on your credit card).

Another point that is important for having a good credit rating is to close any inactive credit card accounts.

You would think that because it is inactive it should not make a difference. As long as you don't owe money on it you should be ok. Right? It is logical, but it is wrong. Inactive credit cards affect your credit rating.

Make sure you cancel any inactive accounts. It will improve your credit rating. Even more importantly, it will likely be one of the points that will get you better rates on the loan.

A lousy mortgage broker

I contacted a mortgage broker to help me decide if I should be refinancing my mortgage.

Despite the great difference in interest rates that I am paying, having signed on my mortgage over 11 years ago, and the interest rates being offered today, the broker still told me not to do it. He said they will probably charge me such high fines that the difference will probably not be so great and savings will be minimal - not enough to make it worth going through the hassle of refinancing.

What got my goat is that he didn't even try. He simply said not to bother.

Perhaps he is the expert and just hearing the initial numbers was enough for him to understand the whole situation and offer his opinion. It just looked like he discounted it too fast and dint really consider it seriously.

Refinance. Just do it

Take advantage of low interest rates and refinance your mortgage. The savings can be tremendous.