With so many people needing to save money, mortgage refinancing is very popular right now. With so many options, a homeowner can easily get confused. However, here are some good reasons to refinance a mortgage, no matter what your situation is.

Refinance into a Better Interest Rate
Odds are, you got into your mortgage a few years ago. Since then, interest rates have dramatically declined, and obtaining a home loan interest rate of under 6% is possible, even for fixed rate mortgages. Here is an example of what just 2% savings in interest rates can mean. Say your $150,000 home loan has an 8% rate, and you pay $1100 every month. If you were to refinance into a mortgage with a 6% interest rate, your monthly payments would be less than $900.

Switch Home Loan Types
Many homeowners have an adjusted rate mortgage (ARM) loan that offered low initial rates, but have since gone up, and leave the monthly payments changing all the time. This hurts many homeowners financial stability as all of a sudden, they can owe a few hundred dollars more for their mortgage one month, and they may not have it. A very good and popular reason people refinance is to get out of their ARM loan and into a more stable fixed rate mortgage. A fixed rate home loan offers long term financial stability for a homeowner, and monthly payments that never change. This is often the best loan type to get.

Reduce Monthly Payments
Besides reducing interest rates to get the monthly payments lower. There are other options for lowering monthly payments besides just the interest rates. Refinancing a mortgage can change the length of your home loan, which could further reduce your monthly home loan payment.

Turn Home Equity into Cash with Refinancing
Homeowners who have owned their home for a few years, have probably built up some equity. This equity can be borrowed against and usually for much lower interest rates than a personal loan. A cash back refinance will allow a homeowner to pocket the difference in loan amounts between the new mortgage and the existing home loan. This money can be used for anything a homeowner wants.

While each persons situation is different, these are some of the most popular, and beneficial, mortgage refinancing options. If you are thinking about refinancing a mortgage, contact your lender or bank today and see what options exist for you.

-M Petrone

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