The Importance of Refinancing: Getting it Right

By Gil Mackey
Mortgage Credit Problems Columnist

Refinancing your mortgage is a great way to lower your monthly payments, get a better interest rate, or take advantage of home equity for a cash loan -- but smart refinancing means understanding the process, the pitfalls, and your rights.

How Regulation Z Helps You in the Refinancing Process

When you refinance your mortgage your lender is required to comply with Regulation Z of the Truth in Lending Act of 1968. This was an important consumer credit protection put in place by the Federal Reserve and, while attempting to read the full regulation in detail is guaranteed to cross your eyes, it goes to great lengths to help protect borrowers. Regulation Z requires mortgage lenders to disclose all the details of your loan to you, up front, before you refinance. However, it's up to you to read the details of your loan and, if you don't understand them -- ask questions!

Common Loan Types for Refinancing Your Mortgage

There are a number of mortgage products available for you when you refinance. Some of the most popular include:

Fixed-rate mortgages: easy to budget for, your payments don't change
Adjustable-rate mortgages: low introductory rate, and then payments can go up or down
Interest-only mortgages: intro period requiring only that you make payments on the interest
Hybrid, payment-option products: new refinancing loans that give you the flexibility to choose how you pay your mortgage

One of the most critical factors to smart refinancing is to shop around. It's hard to stress how important this is, but if you don't shop around you could miss out on the right deal, so check with several mortgage lenders on your refinancing options.

About the Author
Gil Mackey has been a writer and artist for the past twenty years. In addition to freelance writing, Gil writes for his local paper, and lives with his two children in Nevada.

Refinance Quote

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