Refinancing Your Home Mortgage

refinancing your home mortgage

Refinancing your home is an fiscally smart move if it enables you to lower your interest rate. A perfect example of this is if the interest rate has dropped since you took out your original mortgage. Or, if you want to convert your adjustable rate mortgage to a fined interest rate mortgage. The proceeds from this new loan will pay off your first mortgage and also can, if you so choose, free up your equity as cash.

Refinancing 101

refinancing 101

Home refinancing is a simple process. Seek out a lender who offers home mortgage, many of them also offer refinancing a mortgage. Refinancing is not a second loan so please do not confuse the two, it is an subsequent loan on the same home or property in order to get a better interest rate which will lower your monthly payments if you do not take out additional cash. It is possible to take out additional cash and still lower your monthly payment if the drop in the interest rate is significant. Home refinancing is a great tool to save the homeowner money.

The Benefits of Home Refinancing

benefits of home refinancing

There are many benefits to mortgage refinancing, commonly referred to as home refinancing. For most, your house is your biggest asset and generally your mortgage payment is the largest liability in your monthly budget. For savvy homeowners, refinancing is a way to reduce your mortgage payment, trade in some equity as cash if needed and take advantage of lower interest rates saving you money over the life of your loan. Your home is your biggest asset; learn how to make it work for you.

A Lower Refinance Rate Means a Lower Mortgage Payment

lower refinance rate means a lower mortgage payment

Interest rates fluctuate over time, and one should periodically check to determine if the interest rate attached to their home is the lowest available. If the financial environment has caused a significant drop in interest rates, and your credit rating is good, refinancing should be on your calendar. Simply put, a reduced interest rate will reduce the amount of your monthly payment and also will reduce the amount of money you will have to spend for your mortgage over the course of time.

Make Time Shrink When Refinancing Your Mortgage

make time shrin

Most people originally take out a 30-year mortgage when purchasing their home. Which means it will take 30 years to satisfy the loan in full. During refinancing you may opt to reduce the length of your loan, say to a 10, 15 or 20-year loan. If you can shave months, even years off the life of the mortgage, you are saving huge cash without even realizing it. Mortgage refinancing at a favorable interest rate with the added attraction of utilizing the equity in your home is a sound financial decision. Determine if your refinance rate will help you achieve a better financial foundation.

Trade In Your Adjustable Interest Rate for a Fixed Interest Rate

trade in your adjustable interest rate

Perhaps the adjustable rate mortgages were too good to pass up at the time you purchased your home. An ARM (adjustable rate mortgage) were once a tool to assisting people to qualify for a mortgage with their attractive, low interest rates. However, the interest rates that accompany ARMs are temporary, leaving you in the hands of the interest rate of the current financial environment, which may not be favorable to you. An adjustable rate mortgage can be exchanged for a fixed interest rate mortgage at any time. Keep your low adjustable rate for as long as you can, however, make sure you take advantage when the fixed rates drop to a level that you can be financially comfortable. There is added security in knowing that your payments will not increase with a fixed rate mortgage.

Refinancing For Cash

refinancing for cash

When refinancing, you may wish to consider cashing out some of your equity that you have built in your home to eliminate high interest credit, medical bills, college or for a dream vacation. This cash is money you have invested in your house via timely mortgage payments; use it if it will help you become financially stronger.

Say Good Bye to PMI

say good bye to PMI

When you originally purchased your house you may not have had a 20% down payment that caused your lenders to assess you with Private Mortgage Insurance (commonly known as PMI). This is an added cost in your monthly mortgage payment. Over time you have built equity by paying down your mortgage and also the appreciation of your home, this should cause your equity to rise above the 20% threshold and during a refinance the added expense of PMI will be eliminated from your monthly payment. When applying for home refinance loans, check with several brokers to get the best rates and terms available. Refinancing or qualifying for a refinance loan should be a simple and pain free process that will add cash to your wallet each month.

If you were unable to make a down payment of 20 percent when you purchased your home, you may have been required to purchase Private Mortgage Insurance (PMI). If your house has appreciated since then, and you've steadily paid down your mortgage, your equity may now be more than 20 percent. If you refinance, you will no longer need PMI.

In many ways, your house is like a cash cow. If you have discipline and knowledge of the benefits of refinancing, you can tap into its milk for years to come.