| Refinancing home loans is the first and easiest | | | | interest rate, but keeps your payments the same |
| option for many homeowners struggling with | | | | or a little higher - this allows you to pay off the |
| overwhelming mortgage payments. The most | | | | principal faster and save you even more money. |
| common reason for monthly payments to | | | | This is a good option if you're financially stable. |
| suddenly be out of reach is: | | | | If your credit rating has improved substantially |
| Adjustable Rate Mortgage (ARM) | | | | since you bought your home, you can often |
| When interest rates were low and going lower, | | | | qualify for a refinance at a lower interest rate. If |
| many homeowners opted for adjustable rate | | | | you need cash, you can draw on the equity in |
| mortgages which followed the interest trends. | | | | your home - increasing the principal of the loan. |
| This caused interest rates to reset and have an | | | | Often this is accompanied by extending the term |
| adverse effect when rates go up. Many | | | | of the loan back to the original length. |
| homeowners start seeing their mortgage | | | | Refinancing Costs |
| payment climb steadily and opt to switch to a | | | | Fees, appraisals, credit report, underwriting, title |
| traditional, fixed rate loan. | | | | insurance, escrow and recording fees as well as |
| In some cases, refinancing may be sought simply | | | | possible prepayment penalties could apply, so ask |
| for benefits and not because the homeowner is in | | | | before you commit to refinancing your home. |
| financial trouble. It's important to keep your eye | | | | These and a dozen other charges can pile up fast |
| on the big picture, and think about the long term - | | | | and end up totaling thousands, especially if you |
| especially when it comes to making changes to | | | | pay points as well, so make sure you will be |
| your home loan. | | | | saving enough money to actually come out ahead. |
| Home Refinancing Options | | | | Alternately, you can try to get the fees waived. |
| You can request a refinance that keeps | | | | If you are going to be in your home long enough |
| everything on your loan the same except the | | | | to recover the costs, and benefit from your |
| interest rate. This will usually lower you monthly | | | | refinance long term, go for it. If not, you may |
| payments slightly and save you considerable | | | | want to reconsider. Your attorney can help you |
| money over the remaining term of the loan. This | | | | work out the math and ramifications of a |
| is a good all around option. | | | | refinance. |
| You can request a refinance to avoid having to | | | | A break even table should be available from your |
| pay a balloon payment if you arranged a short | | | | lender to show how long it will take to pay off |
| term ARM. Refinancing can roll that amount back | | | | the closing costs as opposed to the savings from |
| into the loan and get you a fixed rate. This is a | | | | refinancing home loans.. If you plan on staying in |
| good option if you are in a tight spot financially | | | | the home long enough to realize a benefit, then |
| You can request a refinance that lowers your | | | | refinancing is a good option. |