 |
 |
Home Mortgage Refinancing: How it Works
by Karen Lawson
CMR Columnist
 E-mail Friend
 Printer Friendly
Why is home mortgage refinancing important? What does mortgage refinancing mean, and how can it work for you? The answer depends on how long you've had your mortgage, its interest rate, and your financial scenario. Used wisely, home mortgage refinancing can lower your mortgage payments, consolidate debt, and provide cash for home improvement, college, and other big-ticket expenses.
Is Home Mortgage Refinancing for Me?
The primary reason people refinance their mortgages is to lower their interest rates. For example, if you're now paying 7% on your mortgage, and the current market rate is 5%, refinancing could lower your payments. In recent years, historically low interest rates caused a surge in refinancing. Other reasons to consider refinancing your mortgage include:
- Switching from an adjustable rate loan to a fixed rate loan
- Consolidating first and second mortgage loans
- Obtaining cash for major expenses such as home improvement with cash-out refinancing
- Consolidating consumer debt at a lower interest rate
Home mortgage refinancing is a way of trading in your old mortgage for a new one. There are things to consider when shopping for home mortgage refinancing. As with your current mortgage loan, there may be closing costs and fees. Shop carefully, as mortgage refinance rates and costs vary. Consulting a financial advisor before refinancing your mortgage can help determine how refinancing can benefit you.
A New Mortgage and a New Car?
It may be tempting to take out a "cash out" refinance transaction so you can buy new furniture, a new car, or a dream vacation. It's wise to remember that the amount of your mortgage affects the equity you have in your home, so be sure to balance your needs with maintaining the equity in your home.
In many cases, home mortgage refinancing can streamline your budget by lowering your present interest rate and payment amount. Home mortgage refinance options can help improve your household budget.
Source
Fannie Mae
About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in the mortgage lending industry. She earned an MA degree in English from the University of Nevada, Reno.
|
 |
|
|
|
|
