Whether ‘tis nobler in the hearts and minds of men to suffer the slings and arrows of refinancing your home?

That’s a very good question. Interest rates are at a four-decade low and have been for months. Should you refinance? And maybe more importantly, can you refinance? To help set your mind somewhat at ease, first note that yes Virginia banks are lending, however it is not as easy to get a loan as it had been in fact lenders are making it quite hard to get approved.

Lenders used to only require tax returns and pay stubs going back for 18 months. Now everyone is requiring 2 years worth of documentation and proof.  Keep in mind that the best rates are only going to those with the high credit scores and clean credit history. There are those who just won’t be able to take advantage of low rates because they’ve suffered a job loss or their income has been reduced and it now falls below the minimum required to qualify.

However even those up-side down or under water can get a home loan. It isn’t impossible to do but it certainly isn’t easy either. There will be those who are not able to refinance because they do not have any equity, however help is still available to some in the form of Home Affordable Mortgage Program, HAMP, if you have a loan that is owned by either Fannie Mae or Freddie Mac. If your loan is owned by either of these you can refinance with out having any equity.

What if you recently refinanced? What if you just financed a new home in San Marcos or Detroit?Recent interest rate drops have enticed homeowners who already refinanced to think about refinancing again. Is that a good idea? It depends on how long it would take you to recoup the refinance closing costs, including title insurance, points and escrow and appraisal fees. Refinancing an average loan costs about $3000. Compare your old mortgage payment to the new proposed mortgage payment. How many months of savings will it take to “get back” the closing costs?

New lower monthly mortgage payments do not necessarily translate into lower overall costs. Every time you refinance, you are restarting the clock on your loan. If you’ve been paying on your current mortgage for 10 years, you probably have another 20 years until it’s paid off. If you get a new 30 year loan, your payment will be significantly lower, but you’re starting the 30 years over. The money you spend on an added 15 years of mortgage may be more than what you thought you would be saving by getting a lower rate. Consider refinancing in to a 15 or 20 year loan.

You have to do your homework on mortgage financing, just like any other major purchase. Ask around. Ask family, friends and co-workers who they refinanced through and what interest rates they got. Part of the problem with the housing meltdown was people were borrowing and not really doing their homework. You are getting a loan and you have to repay the loan or you could lose your home so it is vital that you read and understand all the documents that come with your mortgage. If you don’t understand something then ask questions.

Be sensible. Do your own due diligence and homework and you will not only save yourself some headaches but you save some of your hard earned money in the long run.