Online  Mortgage Loan information   ► Apply Now Refinancing a home mortgage: Its pros and cons As there are always two sides to a coin, refinancing a home mortgage has its advantages and disadvantages. Quite often, people simply jump overboard to join the bandwagon of people who go for refinancing without even considering the circumstances involved and without analyzing or assessing on whether or not savings will be accumulated in the long run. This is a very serious matter that involves hard earned money so it is imperative for anyone thinking of refinancing to do the necessary calculations to get the best refinancing package available or to merely stick with the existing one instead. Review the documents… It is very important to read the fine print that comes with the documents involved in refinancing as well as the documents you may have had with your existing loan. Quite often, you may have overlooked hidden charges or penalties. Then there are the costs involved in refinancing which may include processing or application fees, title search fees, appraisal fees and others associated with your refinancing. Not to mention the lawyer’s fee you will have to shoulder if you enlist the help of an attorney to help you review the documents and guide you through your refinancing transaction process. Some of these fees though could be reduced or you could bargain to have it waived depending on the chosen mortgage lender/broker you choose or if you would decide to stick with your existing one. Interest rates Basically you can choose between either a fixed rate or a variable rate when refinancing your mortgage. Both have their own advantages and disadvantages. The great thing about a fixed rate is that it doesn’t change depending upon market conditions. Although you have to admit it is quite a sad scenario to be paying an interest at the rate of 8% when the interest rates has dropped to 5%. The arena is different when it comes to the variable rate. You will be happy paying for your interest when rates are low but you cannot control it when rates may shoot up and stay at that rate for quite sometime. Go for a fixed rate when a low rate is being offered. There are also packages where you can have a mixed combination like having a fixed rate for the first five years and then variable rates in the succeeding years. There may be a catch… You have to be aware of traps like being made to pay of early payment fees or a prepayment penalty on your existing mortgage. Although most of the time your prepayment fees can be offset by the savings you will gain from the lower interest rates that will be provided with your refinanced loan. Some helpful tips… Getting yourself a discount broker can help you save thousands of dollars. Try to let your existing mortgage lender match the package being offered by another mortgage lender or broker. Try to obtain refinancing packages that have lowered or waived application fees and charges or what they refer to as “no cost” refinancing packages.