Arkansas Refinancing

Are you thinking of refinancing your Arkansas home? If so, you are probably thinking about saving as much money as possible. You may have heard all of the advertisements telling you to take advantage of low refinancing rates, and they may have got you thinking about how to save money on your Arkansas mortgage payment. Yet there are some things you need to know before you refinance so that you save the most money possible.

Mistake #1: Not Choosing the Right Mortgage

Most people have no idea that there is more than one way to refinance a home. There are more loan products available that can be designed to fit your refinancing needs. So it is important when you are refinancing your Arkansas mortgage that you find the right loan program for you. Depending on how long you are going to stay in your home, your financial situation, and other factors, you should look into different refinance options.

Mistake #2: Not Doing a Financial Analysis

The main reason you are refinancing your Arkansas home is to save money. However, many people jump into refinancing just because they think it will save them on their mortgage payment each month. Yet, to be srue you are actually going to save money you need to do a break-even analysis, which will tell you how much money you are going to save. The simplest way to determine your break-even point is to divide the cost of the loan by the amount you will save each month. This will tell you that you how long you need to stay in your Arkansas home before you break even on your refinancing costs.

Mistake #3: Overpaying on Your PMI

PMI is mortgage insurance you pay just in case you default on the loan. It does not protect you, but instead it covers the bank if you default. When you refinance your home for more than 80 percent, which can happen with cash-out refinancing, you may end up having to pay PMI again. If you know you have an 80 percent equity stake in your Arkansas home, you need to be careful of how much you are refinancing.

Mistake #4: Closing Your Mind to Other Options

Many people only think of fixed rate mortgage refinancing. It is true that a majority of refinancing is done to refinance with a fixed rate mortgage, but you may want to consider other options for your Arkansas home. Sometimes and adjustable rate refinancing will actually save you more money. Be open to other refinancing options.

Mistake #5: Being a Singular Sensation

You may think that your local mortgage lender may be your best option, but only looking at one refinancing company may not be in your best interest. When you are considering refinancing your Arkansas home, you will end up with the best rate if you shop around. Each lender varies on how they look at your financial situation and your home, so you will want to go with a company that can refinance your Arkansas home at the best possible rate.