When to refinance a home mortgage is one of the most common questionsa homeowner has. While each persons situation is different, mortgage refinancing can be a great way to take advantgae of lower mortgage rates, get cash from the equity of your home, or reduce your monthly mortgage payments.

Typically, homeowners refinance to save money on their interest payments. As a rule of thumb, a homeowner should not consider refinancing until they are able to get a mortgage interest rate which is at least 1% lower than their current rate. This is enough of an interest drop to save the homeowner money, even after paying closing costs and fees.

Other homeowners wish to get lower payments, but their credit has gotten worse since they purchased their home. This can be done through extending the length of the mortgage. While this will not actually save money, the payments every month will be lower. This is a choice for homeowners who are struggling to make their monthly mortgage payments. A homeowner can always refinance again after tey ave reestablished their credit, and get a lower mortgage interest rate.

Yet another option is taking some of the equity out of your home, and getting cash for it. A cash out refinance is when a homeowner refinances for more than they owe on their current mortgage. The difference in amount between the new loan and the amount due is pocketed by the homeowner. This money can be used for anything a homeowner wishes, although it is wise to have a financial plan.

Mortgage refinancing can be a great option for many homeowners. Right now interest rates are really low, and most mortgage holders would be able to greatly reduce their interest payments by simply refinancing.

-M Petrone

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