The Pros And Cons Of Refinancing A Mortgage Loan

Current refinance rates are at all-time lows; as such, refinancing a mortgage is more attractive than ever before. However, Hale Walker of MiMutual, believes that people need to take into account the entire cost of refinancing and not just how much interest rates will lower.

"Some people just want to brag about their low rate at the country club," Walker said adding that in some cases "the transaction doesn't make sense."

Refinancing a mortgage means taking out a new mortgage loan to pay off your old one, hopefully at a lower rate. However, there's more to refinancing than just lowered mortgage rates. Additional costs of refinancing include appraisal, origination and other fees that can end up costing you more than you save.

Rather than giving into the hype about the lowest rates ever, he urges homeowners to look at their own specific situations to see if the time is right and what their refinancing options are. However, Walker also adds that "we really haven't ever seen rates this low" and that the savings can be significant if you're going to knock a couple points off your mortgage interest rates.

Despite the historic lows in today's mortgage loan market, homeowners shouldn't base their decisions to refinance on just that aspect alone.

"We're more comfortable lending today because we're absolutely convinced that the market has bottomed out," Walker said. "If you're able to make your payments, have a good job and your credit is proven, you're not going to have any trouble refinancing."

"Bigger banks are processing mortgages on slow timeliness right now, community banks and independent lenders are doing it much more quickly," Walker said.

And while your credit score is going to come into account, it isn't the end-all that it was in the past, as income and payment history are becoming more valued.