Many people are hearing about all the benefits of refinancing a mortgage in today’s economy but have no idea what that really means. Here is a brief overview of what refinancing a home mortgage means, and how it can help. Each person’s situation is different, but this overview is pretty basic and will apply to the majority of homeowners.

Refinancing can seem a bit overwhelming but when you realize what is actually going on, and that you’re in charge, it is not so intimidating. Many homeowners can benefit from refinancing a mortgage in today’s economy due to the very low interest rates that are available right now. Mortgage rates are so low because of a struggling housing market and overall economy. While that may not be the best news, it does make for a great environment to refinance a home mortgage.

Basically, refinancing a mortgage is replacing your current mortgage with a new better one. This new home loan can have better terms, conditions, and interest rates, according to your financial situation and the market. This new home loan is used to pay off the existing, higher cost mortgage and will result in the homeowner saving money if they are able to obtain a better interest rate, or more favorable terms and repayment schedules. The key though to actually saving a lot of money is the interest rates.

Many homeowners have improved their financial situation or credit since purchasing their home. Also, a lot of homes have actually increased in value since they were purchased. This can make it easy to obtain a good low rate when refinancing a home loan. If just 1% in interest rates can be shaved off the loan, homeowners can usually save money and will benefit from getting a mortgage refinance. With interest rates near 5% right now, and many people paying closer to 10%, the time is right to refinance and take advantage of market conditions. Even after the costs involved with a refinance, the savings will quickly add up and overcome which results in a lot of extra money that was unavailable before. Refinancing a home mortgage can also result in homeowners actually being able to equity in their home faster than they were before due to paying less in interest.

Always keep in mind that refinancing a mortgage is totally optional and completely up to the individual homeowner to pursue. However, this also means that refinancing with any lender or bank is possible and it is always advised to compare a variety of different offers to find the best one for your situation. Do not give the mortgage lenders and banks a chance to bleed you dry with their fees and costs and make sure you approach them with the offers you have already received. This will show that you are serious, qualified, and ready to refinance and not play games with fees and costs.

Refinancing a mortgage is not hard to do at all and is often very beneficial. After all, you already got the loan in the first place and refinancing is basically just getting a new home loan while eliminating your old one.

-M Petrone

Subscribe via email

Enter your email address:

Delivered by FeedBurner