Refinancing a mortgage means to replace the current mortgage or mortgages with a new loan. There are many reasons a homeowner may look to refinancing their home. Some reasons to use a mortgage refinance loan include:
- Reduce Interest Rate: Many borrowers look to refinance their mortgage if they can lower the interest rate that have on their current home loan. Have you improved your credit score since you took out your original loan? Have rates dropped recently? These could be signs now is a good time to look at your refinance options.
- Change the Repayment Time: You may be able to lengthen or shorten the number of years you have to pay off your mortgage when you refinance. You may want to look at a longer term loan if you need to find a way to lower your monthly payments. However, if you are looking to pay less in interest over the life of the loan you would want to look at shortening the length of your home loan.
- Pay Off Debts: Most of us carry some debt no matter if it is credit cards or department store cards refinancing is often a great ay to eliminate a high interest debt and consolidate it into a lower rate mortgage.
- Risk Reduction: Adjustable rate mortgages were the rave during the housing boom but a crash in the real estate market began to show the risk involved with adjustable rates. When the interest rates begin to reset a borrower’s can often find themselves with a much larger monthly payment. By refinancing into a fixed rate mortgage you can eliminate your interest rate risk by locking in a rate for the duration of the loan.
- Cash-Out Refinance: There are times when you may need some extra cash and tapping into your homes equity could be a great solution. Homeowners use cash-out refinancing to fund many different projects such as paying for a child’s college education, financing a kitchen remodel or taking the family on a summer vacation.
What ever your reason for wanting to refinance your mortgage finding the best rate possible at the lowest cost should be priority number one. Before you refinance you will want to make sure the cost of refinancing will be smaller than the savings you receive. Figure out how long it will take you to recoup the costs of the new loan and if you believe you will still be in the house at that time then you may want to consider refinancing. Check out our nationwide network of lenders and find a great refinance rate today!
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