The largest debt that most people will ever have is a mortgage. The ability to lower this payment and save on interest is an interesting idea but many people have no idea how to go about doing it.

You will find financial advisers everywhere offering you tips on how to lower the cost of a mortgage. You can lower the mortgage costs on your own with a little time and effort. If your financial and credit situations are both in good shape then refinancing might be considered.

If you are already in a fixed rate loan offering the lowest possible interest rate you have no reason to consider refinancing. There are very few buyers who were able to obtain this deal at the time of their purchase. Many times it was due simply to not having a large enough down payment or that their credit score was too low for the best loans or the better rates. For these people refinancing can really benefit their mortgage costs by lowering them considerably.

Even if your interest rate is not that bad you should consider refinancing if you are in an ARM or balloon loan, anything other than a fixed rate loan. If you are considering refinancing you should make sure that no missed or late payments have been reported to your credit history and that your score is high enough to get you a better rate.

In order to get the best possible interest rate and lower your monthly mortgage costs with refinancing you have to have a good credit score. Equity in the home from living there awhile or by upgrades will also benefit you in obtaining the lower interest rates. The home equity is used to balance the loan and gain leverage for a better rate. If you owe $140,000 on the home and it is appraised at $200,000 then you have $60,000 equity that can be left alone and considered a down payment with your refinanced loan.

Just like if you were selling the home you need to stage it properly for the appraiser. The rooms should be free of clutter and well organized. There should be no signs of damage and any projects or repairs that are needed should be attended to before having the appraiser out to your home.

You do not want to be refused a loan due to a cluttered basement that the appraiser could not visit or an unfinished project that would have added equity. If you are unable to get the home appraised for a higher value then is owed then you will not be able to refinance. The higher the appraisal goes over the amount owed is treated as equity and would get you a much better rate, therefore lowering your monthly mortgage payments.

Graham McKenzie is the content coordinator for a leading South African Homeloans and Bond Origination portal which provides access to Standard Bank Homeloans.