Refinancing is getting a new loan with better interest rates, terms or conditions, and using it to replace your existing home loan. A proper refinance can easily save a homeowner hundreds of dollars every month on their mortgage. Here are some popular reasons why homeowners refinance their home loan.

To Save Money:
Refinancing a mortgage to save money is a very good, and popular reason. Many homeowners currently pay close to double the interest than the rates that are available now. A savings of just 1%-2% on the mortgage interest rate can easily add up to a huge savings for a homeowner. Another way to save the most money possible is to refinance into a lower interest rate, and shorten the length of the mortgage. This can make the monthly payments roughly the same that they are now, and reduce the total amount of interest you pay.

To Get a Lower Monthly Payment:
Many homeowners have a home which they can barely, or no longer afford. This is a result of the struggling economy, shrinking home prices, and a tight credit market. However, refinancing can still get a homeowner a lower monthly payment, without costing them too much. It is possible to refinance into a mortgage that is longer in length, and has a smaller monthly cost than you have now. This may cost you more money in the long run, but can lower your payments to a manageable amount. This is a better alternative than losing your home.

To Get Cash Back from the Homes Equity:
Odds are that if you have lived in your home for awhile now, and have been making the payments, you have built up equity. This equity can be borrowed against, and result in a cash back refinancing option for some homeowners. Say you owe $50,000 on your $200,000 home. You can refinance into a new mortgage, for $100,000, pay off the remaining $50 on your old home loan, and pocket the rest. This is usually cheaper, and at a better interest rate, than a personal loan, and is a good way to get a lot of cash quickly. This money can be used for anything a homeowner wants, but always needs to be paid back so remember that.

There are many reasons why homeowners want to refinance. In this economy, mortgage refinancing is a very popular option. With interest rates being near all time lows, and new Government programs in place designed to help homeowners, getting help with your mortgage is easy. Many homeowners can easily get a mortgage refinance and save themselves a lot of money with every mortgage payment they make, or their home from being lost to foreclosure or loan default.

-M Petrone

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