Right now mortgage rates are at all time record lows across the country. Rates at 5% sometimes even 4% are available in a lot of places. Homeowners who have bought a home a few years ago when interest rates were higher are now considering a mortgage refinance. The applications for mortgage refinancing have went through the roof recently as homeowners look to take advantage of the low rates. If you are considering refinancing, know that there are costs associated with a refinance such as insurance, loan fees, or possible prepayment penalty to name a few. Even with these costs though, if you are able to refinance at just 1% (The more the better) there is a good chance that you can save money, and have lower monthly payments. Rates are for sure lower than just 5 – 10 years ago, and if your credit has improved you will save a lot.

Here are 3 benefits that you can get from refinancing a home mortgage in 2009.

-Lower monthly mortgage payments.
Lowering the interest rate of your home loan you will see a good decrease in monthly mortgage payments. Even a little percentage adds up to a lot in the long run. A proper refinance has the potential to save you thousands of dollars in the long term. How much you will exactly save though is dependent on your personal financial situation so it is advised to research potential lenders before applying. A lot of websites including my own, include a mortgage calculator which can give you a rough estimate of how much you can save.

-Changing the loan type.
A lot of homeowners bought their home with an ARM (Adjusted rate mortgage) which means that as the market changes, so does your mortgage payment. It is not uncommon for a mortgage to go up 50% or even more with an ARM type loan. Homeowners should consider refinancing into a stable fixed rate mortgage. This offers financial stability as you know exactly how much you owe monthly. Plus, some mortgages have balloon payments built in to the final year of them, a fixed rate mortgage does not have that.

-Cash out refinancing.
If you have owned your home for a couple years, you most likely have built up equity in your home due to its appreciation and your mortgage payments cutting down the loan total. Some homeowners may be looking to refinance for more than their current mortgage has left due on it, and pocket the difference in cash. This money can be used for anything you wish although it is best to use it to better your financial position.

Make sure to do proper research and ask plenty of questions of any potential mortgage lenders. Use the internet to do most of the work for you by looking at lenders websites. Once you get a rate from a lender you like shop it around. Often lenders will meet or beat the offer you present them in some way. Good luck, have patience and do your research before doing anything.

-M Petrone

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