Owning property can sometimes lead to hard decisions. One of the biggest questions you can ask yourself, "Should I refinance my mortgage or buy a new home?" This is a major decision that should not be taken lightly. Both alternatives have their pros and cons.

The choice of buying a new house or financing your existing home is ultimately up to you. These are the major points that you will need to keep in mind:

Your Lifestyle Will Be the Basis of Your Choice

When it comes time to either refinance your mortgage or buy a new home, it may all come down to your choice of lifestyle. Would you rather stay in your home for the long haul? Are you under any kind of financial constraints that would definitely point toward this as the better choice? If this is the case, you should refinance.

But if you are a homeowner who prefers to upgrade to a larger home or move to a new area, buying a new property may be the better option. You may wish to downsize to a smaller, more affordable home following a divorce or the death of a spouse. If this is the case, buying a new home will definitely save you time, money, and energy.

Of course, these are decisions that should be made with a realistic idea of your budget firmly in mind. You should only refinance your home if you are sure that doing so will bring major financial benefits. Likewise, you should only consider buying a home if you know for sure that doing so will not put your finances at risk.

Market Factors Will Play a Part

Another major factor that will play a part in your decision to refinance or purchase a new home will be the present condition of the real estate market. You should definitely pay attention to the state of the market at the time that you weigh this decision. A false move could cost you a great deal of money for a long time to come.

For example, it's probably not a good idea to buy a new property solely for the purpose of taking advantage of a weak market where prices are low. Likewise, you shouldn't buy a property only for the goal of locking into a very low rate of interest. The reason is that you have no guarantee things will always be the same.

On the other hand, if you are a homeowner that has already seen their property undergo an appreciable rise in value, things may be different. In this case, you may see a larger profit by selling your present home and then buying a new one. Of course, the area in which you do so needs to have a market that is much less inflated.

A Cash-Out is Always Convenient

The answer to the question, "Should I refinance my mortgage?" may well come down to how good the potential cash-out may be. Deciding to refinance at a time when interest rates are lower is a good idea for homeowners who may be under financial stress. This also applies if you are out of work or in an appreciably large amount of debt.

This style of "cash-out refinancing" arrangement will allow you to consolidate all of your debts that are not related to your present mortgage. All of these debts will now be part of a new mortgage arrangement. This will make it easier to handle monthly payments without allowing your present accounts to fall too far into arrears.

A Wide Range of Options is Available

Deciding whether to refinance a mortgage or buy a new house becomes a bit more complex when you consider the wide range of options that these alternatives can open up. The choice that you make may well have a long term impact on the health of your finances as well as the quality of your life. For this reason, it pays to choose wisely.

A newly refinanced mortgage may have a fixed or adjustable rate of interest. An adjustable-rate mortgage, sometimes known as an ARM, maybe the best choice for homeowners who are planning to sell their homes and move to a new location within a few short years. The idea is to be gone before the interest rate on their loan goes up.

Being in the situation of being able to buy a new house will afford you the option of moving to a bigger or smaller one. Moving to a similar home in a more desirable location may not have a sizable impact on your finances. However, you will have a new mortgage rate as well as the expected costs of a down payment and loan closing.