November 28, 2007

Home Buying: Refinance or Buy New?

Home Buying: Refinance or Buy New?

There seems to be a crossroads that many homeowners reach after being in a home a few years: should you refinance your current mortgage or buy a new home?

If you feel your current home will serve your needs for at least 3 more years, stay put. If your financial situation needs some work, consider a refinance. It's especially important to refinance before you miss any payments or have a significant change in income or credit. A cash-out refinance which consolidates all your debt into your mortgage could free up a lot of cash. Ask a mortgage professional about interest-only loans. You can weather a financial storm with an interest-only mortgage and pay on the principal when you’ve got the available money.

If you anticipate any significant events in the next 3-5 years, think about the kind of home you’ll need. Do you need to downsize or upgrade? Tired of climbing the stairs in your 2-story home? Consider a ranch-style home.

This common question can be answered by assessing your goals and if your home fits in with them. After you do that, it will be much easier to determine if you should refinance or buy a new home.

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