Homeowners typically get a mortgage refinance to obtain a lower interest rate, lower their monthly payments, or shorten the length of their mortgage. While refinancing can be a great thing for a lot of people, if it is done wrong it can be a costly mistake. Here is some advice for homeowners looking for a new, better mortgage.

Mortgage refinancing, while not free, can provide multiple options to homeowners. Things like cash back, lower monthly mortgage payments, or changing the mortgage length are not uncommon at all. Also, homeowners can leave their old ARM (Adjusted rate mortgage) behind and get themselves into a stable, fixed rate home loan.

Cash out refinancing is when a homeowner taps into their homes equity, and borrows against it. While this money still needs to be paid back, it is usually at a much lower interest rate than a traditional loan. This money can be used for anything a homeowner wishes, and is a good way to get a large lump of emergency cash. However, always think about the long term when doing a cash out refinance.

When interest rates are lower than the mortgage rates you pay now, even by as little as 2%, odds are you will be able to save money with that rate. Refinancing a mortgage for a smaller interest rate is probably the most common reason a homeowners refinances their home loan. This will provide lower monthly payments, or can shorten the length of your loan, both would save you a lot of money.

These are just a few of the more common reasons homeowners refinance a mortgage. However, each situation will be different, and need a different loan option. Homeowners are encouraged to do as much research on refinancing as possible prior to approaching a lender or bank.

-M Petrone

Subscribe via email

Enter your email address:

Delivered by FeedBurner