I'm willing to bet that when you initially got your mortgage, it took a lot of work, research, and by no means could have been considered a fun part of the home buying experience. So why would you consider refinancing your mortgage and doing it all over again? Mortgage refinance applications, especially in the past few months, have skyrocketed. This is due in large part to the record low mortgage rates found nearly everywhere in the country right now. So the questions has to be asked. Why do people look into refinancing their mortgage? And secondly, Is refinancing my mortgage a financially stable, and money saving, decision that will work for me?

The exact answer actually depends on your personal financial situation. However, with the sharp drop in mortgage rates over the past few months, it is likely that you stand to save a lot of money be refinancing into a new mortgage with a lower rate. If you can find a mortgage rate that is just 1% (hopefully more) lower than your current rate, you stand to save money from unnecessary interest payments. Now is an amazing time to take advantage of the tumbling housing market, and mortgage rates, and refinance a mortgage to save money.

Sometimes, the reasons for considering refinancing a mortgage does not have to do so much with the current rates, as it does the rate you secured when you acquired your mortgage. A lot of homeowners have grown more financially responsible since home ownership, and thus their credit scores have improved. If at the time you purchased your home your credit rating was shaky, or not up to par with the national averages, and has improved over time since then, refinancing may save you thousands of dollars. Using your new and improved credit score, you will be offered much better rates than could have been offered to you before. Your improved credit score almost guarantees that you will secure a better mortgage, with better rates, terms, and conditions. This will save you a lot of money every month that you can use for whatever you wish.

Another popular reason home owners choose refinancing is to get out of a mortgage they are in that has bad terms, conditions, rates, customer service, and other reasons, and get into a better one. For instance, a lot of homeowners who purchased their homes during the housing boom in recent years opted for an ARM (Adjustable rate mortgage) loan. This loan usually offers very low rates, sometimes for the first few years, then however the rates adjust. As the housing market, or even the particular mortgage lenders business conditions sour, your rates and mortgage payments will increase. It is not uncommon for a homeowners mortgage payment to go up by $500 sometimes more per month due to an adjustable rate. In these cases you have no choice but to pay, or refinance into a more stable fixed rate mortgage. Fixed rate mortgages are a financially stable decision that helps you plan out your monthly expenses. The mortgage payment amount in a fixed rate mortgage will never change. This is also good for peace of mind as you know exact amount required every month for mortgage payments.

Finally. Another popular reason homeowners refinance their mortgage is to get some cash out of the refinancing. Homeowners can use the equity they have built up in their homes over the past years and leverage that in their refinancing to get cash back. For instance, say your home is worth $100,000 and you owe $25,000 over the next 5 years on your mortgage. You can refinance into a new mortgage for say $50,000 that is due over the next 10 years, and walk away with the $25,000 difference in your pocket. This money can be used for anything. Though it is wise to use it to better your financial future. Many people use this money for home improvements, paying off other debts, home repairs, tuition, car loans. However this money can be used for anything you wish.

Refinancing your home mortgage can be a great decision if it is done properly. Do plenty of research on any potential mortgage lenders and do not be afraid to walk away from them. Once you do get a quote that you like, get it written down on paper. Shop this exact quote around to other mortgage lenders and see if they can match or beat the offer. You would be surprised how many lenders will meet or beat it when prior they claimed they had quoted the best rates they could. Be careful and good luck.

-M Petrone

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