With interest rates at their lowest in decades many of us are considering refinancing our mortgages.

Refinancing your mortgage can help you simplify your personal finances since interest rates are so low? Should you refinance now is a good question to ask yourself but it will depend. There are several reasons why you should consider refinancing and low interest rates are only one of the reasons why.  Yes a lower interest rate rate can save you money but make sure you consider these questions before you decide to refinance your mortgage.  It will help simplify the refinancing process.

#1 What is your current interest rate? Before you consider if you should refinance or not you must know what your current interest rate is.  Is your current interest rate a fixed rate or an adjustable rate?  If you currently have a fixed rate, what is the difference in your existing fixed rate and the current market rates.  If you have an adjustable rate it is important to know the difference in your existing rate and current rate but you also want to know when your adjustable rate will adjust.  This can significantly impact when you need to refinance or not.  Also what will the rate adjust to on the adjustment date?

#2 What type of mortgage do you have? Is your existing mortgage a 30 year fixed, 15 year fixed, or 7 year, 10 year, or 5 year adjustable rate mortgage?  Understanding your current terms will help with your decision.

#3 What is the estimated value of your home? You want to know if your home has increased in value or decreased in value.  The reason you want to know this is because a decrease in value can have a impact on the refinancing of your mortgage particularly if you owe more than your home is currently worth.

#4 What will be your estimated closing cost? You want to know how much the refinancing will cost you.  Do you have the funds available?  The closing cost will include title work, appraisal fees, and any leader fees they may charge.  So make sure you ask before you start the refinancing process.  Your lender should be able to give you an estimate of what the closing cost will be.

#5 How much will refinancing save you? Saving over the long term is the reason most people refinance.  So calculate your total monthly and yearly savings.  Also remember to add in the closing cost when calculating your total savings.  You don’t want your closing cost to negate your savings.

#6 What is your lenders underwriting criteria? Due to the current economic conditions many lenders have tightened their underwriting standards.  Be sure you understand their criteria.  For example,what type of credit score is required?, What are their loan to value standards? and What financial documentation will be required?

#7 How long do you plan to stay in your existing home? This helps to understand what terms are best for your situation.  For example, if you know you will be moving or purchasing a new home within 5 years do you want a 30 year fixed mortgage. Maybe or maybe not. If you plan to stay in your current home for the next 10 years do you really want the 5 year adjustable rate mortgage just because the rate is lower rate.

TAKE ACTION by answering these seven simple questions before your begin the process of refinancing of your mortgage. Remember take one step at a time to simplify your personal finances.

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How can one number simplify your persona finances?  Yes it is true.  One number can help you simplify your personal finances.  This number will make things easier for you and will help you reduce your financial stress.  This number is not a large number.  You are probably thinking yes one very large number can help me simplify my personal finances.  If you read Would winning the lottery simplify your personal finances?, you will know that I do not believe having a large amount of money will simplify your finances.  Let me stop the suspense and tell you.  The number 1 can help you simplify your finances very easily.  Think about it if you only had:

One checking account and saving account- you will know where all of your money is held.  There is no need to have a spreadsheet to keep track of all of your accounts.  Less mail to receive with only one account.  Less accounts you have to balance at the end of each month.

One bank – you will never have to think which bank account do I need to take the money from.  No need to think about which online bank account I need to log into.  Everything for your finances can done at one location or one login.

One mortgage – if you need two mortgages to purchase your house should you even be purchasing the house.  You can only live in one house at a time so why would you need two.  Just think of the up keep you would have with two homes.

One car per driver – If you are lucky you may be able to have one car for the entire family.  That would save you alot of money.  But that is not always practical.  So stick to one car per driver in the home.  If you have three cars and only two drivers, how often is the extra car driven.  You can save on maintenance  and insurance by getting rid of that extra car.

One cell phone – unless your job requires you to carry a phone for work.  You do not need more than one cell phone.  Eliminate that additional expense.

One investment account – its much easier to keep track of your investments if you only have one account.  You will have a better understanding of your overall asset allocation as well as keeping track of your investment performance.

One credit card – yes having only one credit card came significantly simplify your finances.  It limits your spending and enables you easily track your spending and credit card debt.  Eliminates the need to pay multiple bills each month.

One service provider – if you can consolidate your utilites to only one provider that will eliminate the bills you have to pay.  This is not always possible but can simplify your finances if you can do this.

One advisor – do you really need more than one investment advisor or accountant.  Probably not.  Decide which one provides the services you need and best fits with your goals and objectives.

One insurance provider – usually you can consolidate your home and auto insurance which may lead to a discount.  Is there really a need to have separate insurance companies.  Again reduces the number of bills you must pay and keep track of.

So you can see how the power of one can help you simplify your personal finances.

Can you think of any other ways to reduce to one to help you simplify your personal finances?

If you would like learn more tips to help you simplify your personal finances make sure you subscribe to simple financial lifestyle email newsletter and subscribe to RSS feed for blog updates.

This post was featured in Carnival of Personal Finance: Parts of Speech Abuse Edition hosted by Mighty Bargain Hunter.

Here are this week’s simple tips to help you eliminate writing checks to enable you to simplify your personal finances:

• Step up automate bill pay – a great way to eliminate check writing is to use a automated bill pay service.  See post  Who else wants to save money and have less stress when managing their personal finances

• Sign up for on-line banking – Instead of keeping a check register and have to reconcile your check book at the end of each month, signing up for online banking enables you see to  your accounts online to see what has cleared and not cleared.  Save you time.  You can even use your bank’s bill pay service if its offered.

• Use credit cards or debit card to make purchases – Have all of your monthly bills charged to your credit card or debit card.  See post Two card financial trick to simplify your personal finances

• Can help eliminate ID thief – Your paper checks has valuable personal information on them such your name, address, bank  account number, and signature.  I have seen people include their driver’s license number.  That’s a little too much information.  All of this information can be used by anyone who sees your check.  So not writing checks can reduce the risk of ID thief since this information will not be seen by everyone who handles your check.

• Saves time and money – Not not having checks to write on a monthly basis saves you time since you should have all of your bills paid automatically.  Its saves you money since you will not have to purchase checks or stamps.

ACTION STEP

By the end of this week try to implement one of these 5 steps to help you eliminate the need to write checks.  If you just start with one monthly bill at first then eventually have all of your bills paid automatically, at least you have taken action towards  living a simplified financial lifestyle.

If you liked these tips and want to learn more, make sure you subscribe to simple financial lifestyle email newsletter and subscribe to RSS feed for blog updates.

Til next week take one step at a time to simplify your personal financial life.

Eliminate the ATM fees – Tired of those non-bank ATM charges showing up on your monthly statement.  Review your ATM usage.  Are you using the first ATM that you see or the most convenient one which unfortunately is not your bank’s ATM.  To eliminate the non-bank ATM fee only use your bank’s ATM or ATM network.  You could also withdraw money from your local store that accepts debit cards.  No fees associated with cash back when you make a purchase.  Also for more tips on how to eliminate the non-bank ATM fees read  6 Ways to Knockout ATM Fees.

Prevent overdraft fees – Do you have a tendency to overdraft your account every once in awhile which result in overdraft fees?  Establish overdraft protection for your primary account by linking it to a saving account or a credit card.  Some banks may still charge you for using the overdraft protection but it will be less expensive than the NSF charge by your bank as well as the merchant.  The best way to eliminate those pesky overdraft charges is to set up an alert on your account bank account to alert you that your account has reached a minimum balance that you have established.  For example you may want to keep a couple hundred dollars as cushion in your account so you do not overdraw your account.  Then set up an alert to notify you when your account has reached your predetermined cushion level.

Avoid those monthly service fees – These fees can usually be avoided if you keep the minimum account balance in your account.  To do this you want to know up front what the minimum account balance is so you can maintain this balance to avoid incurring the monthly service charge.  If you have multiple bank accounts consider consolidating them so you can maintain the minimum balance to avoid the monthly service charge.  Also if you have multiple banking relationships consider consolidating them to your main bank this way you can avoid the monthly service fee.  Also read my post Things to Consider when Opening a Bank Account.

Avoid wire fees - Do you wire money every time you need to send money?  If you are just sending money to a friend, relative or paying a bill, you easily send it by automatic clearing house (ACH) instead of wire without the fee.  Unless the money is a significant amount for example to make a large purchase and you should send by wire to make sure it was delivered and it can be tracked.

Avoid check fees - Are you tired of paying for checks?  Stop writing them.  You ask how will I pay my bills if I can’t write checks?  Easy either have all of your bills paid by credit card or sign up for online banking bill pay service with your bank.  See post Who Else Wants to Save Time and Money.  Using either of these methods to pay your bills will not only eliminate the need for checks it will also simplify your personal finances.

So the next time you open your monthly bank statement and see one of these fees on your statement remember these five ways to eliminate or reduce those fees so you can simplify your personal finances as well as stop giving your money away to your bank.

Know your cash needs – Many times the reason we are charged those non-ATM fees is because we do not plan ahead.  Knowing your daily cash needs will help you avoid using the non-bank ATM.  Creating a budget or spending plan will help you determine your daily cash needs.  By having budget you will know what your cash needs are so you will not have to visit that non-bank ATM and incur those dreaded ATM fees.

Limit your ATM transaction - Try to limit your ATM use to once per week when you know you will be able to use your bank’s ATM.  I will assume your bank is either close to your home or job.  Decide what day of the week is most convenient for you to make your weekly withdrawal so you’re not spending unnecessary time searching for your bank’s ATM or being charge unnecessary fees because you did not plan ahead.  If you only go to your bank’s ATM once a week it also helps you control your spending because if your out of cash you know you have gone over your weekly budget.

Use only your bank’s ATM – The easiest way to eliminate those ugly ATM fees is to only use your bank’s ATM.  If you find yourself constantly using the same non-bank ATM, why not consider either opening an account at that bank or moving your entire banking relationship to that bank.  See Things to consider when opening a bank account.

Use debit card instead of cash – Stop using cash will eliminate your ATM usage.  How can I stop using cash?  Begin to use a debit card for all of your purchases instead of cash.  Most places will accept debit cards.  Not only will using a debit card eliminate the need to withdraw cash it will also help you manage your spending.  Every time you use your debit card it will be shown in your account activity on your bank statement or shown online.  Many times we forget how much we spend when we use cash unless you keep track of your cash receipts.  With a debit card you do not have to keep track of your spending it will automatically be tracked ever time you use your card.  This will help simplify your personal finances.

Use credit card instead of cash – Similar to using a debit card you can use a credit card for your usual cash purchases.  Using a credit card will also enable you to track your spending.  Using a credit card you may benefit if you use a rewards card.  I would only recommend using a credit card if you pay off your account balance at the end of each month.  DO NOT USE A CREDIT CARD if you carry a balance on your card every month.

Get cash without using an ATM – The old fashion way to withdraw money is to go to your local bank teller and request a withdrawal from your account.  This is probably not the most convenient way but it still can be done.  Another way to get cash without using an ATM so you can avoid non-bank ATM fees is to receive cash back when you use your debit card for purchases while shopping at your local grocery store or local drug store.

Take action to eliminate those non bank ATM fees by reviewing your ATM usage for the week.  Think about how many times you used the ATM and how many times you were charged.  Now determine how you will change your ATM usage to simplify your personal financial lifestyle.  Let me know how you have eliminated or reduced your ATM usage to avoid those pesky non-bank ATM fees.

Purpose – Before you sign the documentation to open another bank account you must determine the purpose of the account. Ask yourself the following questions:

* Why do you need to open a new account?

* Does your existing account not meet your banking needs?

* Will this new account be your main checking or saving account?

* Are you looking to establish another banking relationship?
* Are you opening this account for business purpose?

Answering these questions will help you clarify the need for a new account.

Safety – How safe is the bank? With multiple banks recently failing, you have to ask the question, will this bank be around at the end of the year or even in six months. If you’re opening a new account, you want to be able to sleep at night knowing your money will be safe. This tool at Bankrate.com can help you determine the safety of your bank.

Convenience – How convenient are the bank branches and ATMs for this bank? How often will you use this bank’s ATMs or branches? Will you need access to these funds regularly.

Online capabilities – Will you be able to view your account online and are there other online services available such as bill pay services or account alerts. Does your existing bank offer these services?

Fees – Will there be a monthly service charge for this account? If waived initially how long of a period will the fee be waived? Will you have to maintain a specific amount in this new account to avoid fees or to receive priority services or better rate?

Rate- What interest rate will this account pay? Is the interest rate on your account an introduction rate if so how long will you receive this initial rate? What will the rate be after introduction rate expires?

Other banking services- what type of service are you looking for? Are you just looking to use the deposit services of this bank or you looking to us other banking services such as safety deposit or bill pay services. What services are provide at this bank that are not provided at your current bank? Are does this bank provide better customer service than your existing banking?

Remember in order to simplify your personal finances you want to limit the number of bank accounts you have to manage so stop and think before you open your next bank account.