First it’s important to understand that some of the things you may have heard about home mortgage refinance are just myths. Two of the most common home mortgage refinance myths are, how long you need to own your home before refinancing and you need to save at least one percent on your refinance to make it worth while.

MYTH # 1: The length of time you need to own your home.

Many people believe they need to be in their home for at least twelve months before they can refinance. This is not always true. A home mortgage refinance done within twelve months of your home purchase will allow you to change your loan program and give you the opportunity for cash out if your require it. If you refinance your mortgage loan soon after purchasing your home you may also be able to eliminate your PMI (private mortgage insurance) requirement and you may be able to pay off a second mortgage.

MYTH # 2: You need to save at least one percent on your refinance mortgage rate in order to make your refinance mortgage loan worth it.

When it comes to a home mortgage refinance, interest rate savings are not the only factor to consider. It is true that it’s often in your best interest to refinance your mortgage rate only when you can save a minimum of one percent. Saving even more on a home mortgage refinance makes good financial sense. But that’s not all you should consider. For instance, if you have a second mortgage, are paying private mortgage insurance or are in need of cash, the refinance mortgage rate savings of one percent may not be the only determining factor as to whether a home mortgage refinance is currently in your best interest.

It’s important to be knowledgeable of all the associated costs of a home mortgage refinance. You should know about any costs involved in getting out of your current mortgage before you sign up to refinance your mortgage loan. Such costs may include penalties for breaking you current loan (prepayment), origination fees, credit reports and legal fees. For more information on these terms see our Loan Lingo section.