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Many variables should be considered before looking at a refinance loan for your home. Here are some of the most important issues to think about before going forward.

Of course, we need to analyze the existing loan on the property. This loan needs to be compared with your future financial goals. Do you have an adjustable rate loan? Is there a fixed rate that is about to become an adjustable rate on your loan? How long do you see yourself owning this property? Is debt reduction very important to you right now, or are you in more of an asset accumulation mode that requires that you have the lowest mortgage payment possible? Would it be feasible to look at a 15 or 20-year loan, knowing that it could save you tens of thousands of dollars in interest cost? Do you need to borrow some of your equity? Very often this can be the smartest way of paying off debt, financing an important event, or paying for home improvements.

I have heard some of my clients say that they've heard that there must be a 2% spread between the rate that someone currently has and what they would be refinancing to. This is simply not right. There's not really any rule of thumb that can be applied across the board like that. If you are looking to improve your current financing, many things must be considered; but one of the most important factors is time. If a client tells me that they will probably own a property for five or ten years, or more, then a .50% difference in rate could save many thousands, even considering closing costs.

So the decision to refinance is much too unique in each circumstance to make wide generalizations. I have very good comparison software programs that can give you numbers regarding your unique situation. There are some great spreadsheets where you can get a thorough analysis of what kind of savings you could achieve with a new loan, or with a debt consolidation, (cash out) loan as well.

Another common misnomer about refinancing is that it will cost a lot of money out of pocket for the borrower. That is not the case. Just about every refinance loan that I do includes the costs into the new loan amount. This allows the homeowner to finance all of their loan fees without having to pay any money up front. And any effective refinance loan should allow the borrower to save enough money within the first several months of their new loan to more than pay for the fees that it took to refinance.

Of course, the ability to finance costs depends on the property having enough equity to add the costs in. However, that is typically not an issue since closing costs usually represent such a small percentage of the value of a property.

Also, there is a common concern that I hear about the effort involved in refinancing. It should be a very simple process. It's usually a matter of gathering a few necessary documents then my staff and I do the rest. We shop for the best rate, make all the copies, fill out all the paperwork, recommend locking or floating the rate... with just a thirty minute application appointment we can have a client on their way to saving a lot of money.

Mike Sieber, President of Sieber Home Finance, Inc. in San Diego, CA. has been a leading mortgage professional since 1988. While many lenders have collapsed, Mike's firm has grown and thrived by offering expert home refinance service. For more information go to http://www.SieberHomeFinance.com/refinance - or Mike can be reached at (858) 486-9797. You can e-mail him at msieber@cts.com