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When homeowner's think about refinancing their home mortgage, it can be helpful to perform a cost to benefit analysis to determine whether this is an appropriate move. If you received a fixed rate mortgage during a period when interest rates were high, you may want to consider refinancing to take advantage of lower interest rates if you can qualify. It is possible to lower the monies paid out during the length of the loan and pay less per month at the same time. If you are planning to stay in your home for a while, it might be smart move to continue paying the same amount per month as your previous loan, but at a lowered interest rate, in this way, you will build equity in your home faster and pay more towards the principal amount of the loan.

One trend that homeowner's can take advantage of is the home improvement refinance. If you can qualify, you may be able to add equity to your home while reaping the benefits of improved living conditions. If you opt for this kind of refinancing, be sure to contract with an appraiser who can give you an idea of the value of your proposed improvements. These professionals can be a valuable resource that can save you from making an expensive mistake by investing thousands in a remodel that will not add value.

Mortgage holders that financed at an adjustable rate may want to refinance for the benefit of stable payments. Switching to a fixed rate is good for those planning to stay in their home for some time. Cash-out refinancing is when a homeowner refinances for more money than is owed on the house. People choose to do this to pay off other high interest loans. The important thing to keep in mind though, is that in the event of a mortgage holder becoming unable to pay their mortgage, the bank can foreclose to repay the loan. This is a tempting option, but should only be considered by those with a solid, stable income.

When you're ready to refinance, be sure to consider whether you will remain in the home long enough to realize the payback of the refinance. This kind of financial move requires all of the fees and closing costs associated with the primary purchase of the property. Consider point costs, potential PMI's, lost tax breaks, appraisal fees, title search, recording fees and a host of other fees that may be required by your bank. If the cost outweighs the benefit, the entire process is better left alone.

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With two mortgages, it is tempting to consolidate the home loans into one refinanced mortgage. But, this isnt always in your best interest. Depending on a number of factors, you may find that refinancing separately may qualify you for better rates.

Refinancing Options For Multiple Mortgages

You have three options when it comes to refinancing multiple mortgages. You can combine both loans into one, or you can refinance each account separately. The other option is to only refinance the higher rate mortgage.

The rates available to you will depend on your current credit score, market indexes, and your equity. So in some cases, you may find that keeping your low rate original loan while refinancing the higher rate second mortgage will save you the most money.

As odd as it may seem, refinancing your two mortgages separately can qualify them for lower rates than combining the two. This is especially true if you have little equity.

Requesting Quotes For Mortgage Refinance

To find out which option will save you the most money, you have to request quotes. Ask for APR quotes for each of the three options from several lenders. You may find that a mortgage broker site will speed this process up by allowing you to compare multiple bids side by side.

Remember too that points should be considered as a factor in your decision. Paying points for a loan you dont plan to keep for several years may be more expensive than a higher interest loan.

Do the Math Before Refinancing Mortgage

To find the answer to which option is the best, you will have to do a little math. Fortunately, you can use an online mortgage calculator to quickly come up with the numbers.

With each loan quote, figure the difference in your mortgage payment if you refinanced. This number will show you which loan can give you the greatest savings. But, you also need to consider the cost of refinancing. So divide the amount you will save each month by the closing costs, which include points, to determine how soon you will break even.

While doing these calculations takes time, they will save you money and ensure you make the right choice.

Here are our Recommended Mortgage Refinance Companies Online.

Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans.