Why Refinance?
With the serious drop in interest rates that has occurred throughout the past year, many homeowners can benefit from refinancing. Also, new Government stimulus programs have made getting help with a mortgage refinance easier than ever.

Benefits to refinancing can be depending on a persons situation. For some homeowners, a refinance may not even be a good idea at all. Each person will need to evaluate their financial situation, their goals, and the costs involved, and see if the benefits are worth it.

Also, be sure to consider why you want to refinance. Do you want lower interest rates? A lower monthly mortgage payment? Better loan terms or conditions? Want cash back from your homes equity? These are important questions to ask yourself prior to refinancing a mortgage. Knowing what your goal is will also make the process easier and more streamlined for you. Mortgage lenders and banks can do a number of things to your mortgage when you refinance, and almost anything is possible. However, the most popular reasons are to get cash back, lower interest rates, and to lower monthly payments.

When to Refinance
Typically, a rule of thumb is that refinancing can be a beneficial thing to do if you can get mortgage rates that are 2% lower than the rates you pay now. While this is not the case every time, it is a good general rule to follow. However, there are other reasons people refinance their home.

Sometimes, homeowners want to use the equity in their home and get cash back. This is called a cash back refinancing. This is when the new loan, obtained from the refinance, is bigger than the loan it is replacing, and the homeowner pockets the difference. This can be a great way to obtain a lot of cash, with a low interest rate. Often, this is much cheaper than getting a personal loan. This money can be used for anything a homeowner wants but is best used to further your financial goals.

Yet another popular option for refinancing is to get out of an adjusted rate mortgage and into a more stable fixed rate home loan. Many homeowners were happy to take advantage of low introductory ARM interest rates. However, once that introductory period ends, the interest rate can change from month to month. This means that a homeowners mortgage payment can change, a lot, every month. Many homeowners like the stability of a fixed rate home loan, and benefit from payments that never change.

-M Petrone

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