It is not at all uncommon to refinance a home or condo mortgage 1 time through the long mortgage period.This does not mean it makes sense for everyone though. Make sure you have a good understanding of home or condo mortgage refinancing, and are doing it for the correct reasons. The following topic covers 3 basic good reasons to consider refinancing your home.

Reason 1:

A lot of people, when applying for their first mortgage loan, did not have the best credit records, therefore, the usual course is an A.R.M. Loan (Adjust rate mortgage), which allows people with less then stellar credit, or down payment, or both, to get into a home or condo mortgage. It usually offers lower initial interest rates, and more often than not a low or no cost closing fee. After awhile though, that rate usually tends to go up and you have no control of how much your condo or home mortgage will be from month to month. If it gets too high, its a good sign it is time to refinance that mortgage into a standard 30 year fixed rate.

Reason 2:

A great thing about mortgage refinancing is that you could be lowering your monthly mortgage payments. There are a few methods of determining when the time for you is right to make the decision to refinance. Usually, if the current fixed rates are around 3% lower than your current mortgage rate, it is a great time to consider refinancing. The savings in those 3% points can reduce your monthly mortgage payment, and you are still borrowing the same amount of money as you were initially, just at a much better financing rate, therefore saving you out of pocket cash every month for the length of the mortgage. Also, another method is to extend your payment terms, say from 20 years to 25 years. This is not going to save you any money, but it will make the monthly mortgage payment smaller. Definitely only do this if you need to free up cash not only now but for a few years.

Reason 3:

Refinancing your condo or home mortgage to pay off other high interest debt you may have accumulated. This is a great way to put cash in your pocket and using it to pay off your debts that are higher than your mortgage loan interest rate is. That is usually everything you owe. Use it to pay off credit cards first as they usually have the highest interest rates, than your car note, than anything else you owe, starting with the highest APR (Annual percentage rate) first. Since at this point you have already accumulated these high interest debts. This is a great method to save long term money, using your current mortgage.

-M Petrone


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