Find Out Why To Refinance Mortgage

Find Out Why To Refinance Mortgage

Lately the news and media have been reporting gloomy figures about the home and mortgage financing market across the nation that may leave some home owners wondering if there are any benefits to refinancing their home loan. The truth is that a refinance mortgage loan still offers many opportunities for those who are looking to utilize their home equity, stabilize their fluctuating mortgage, and restructure their home loan finances.

During the days of the refinance boom, many home owners enjoyed huge appreciation and home value gains each and every year which allowed them to access the equity in their home for what ever reason they desired. However, presently many are taking a more cautious approach and wondering what exactly are the best reasons to take cash out of their home? According to the Federal Reserve DSR report in 2007(debt service ratio), the average homeowner spends roughly 18% of their income paying off financial obligations.

A refinance mortgage loan that helps you consolidate your high interest credit card debt can save the homeowner significant amounts of money on monthly interest payments. By consolidating your revolving debts which are non-tax deductible, into your mortgage can also yield more savings each and every year because that debt is now embedded with your mortgage interest, which you can write-off as a tax deduction.

Another benefit to refinancing your mortgage for many homeowners is switching over from an Adjustable Rate Mortgage (ARM) to a more stable, fixed rate loan. There are many options available for homeowners who include the conventional; Fannie Mae backed loans that can be obtained by those with good credit and income profiles. However, for those who may be challenged financially or have a poor credit file there is still hope via a mortgage that is backed by the Federal Housing Administration. These loans are slightly different than conventional loans, but guidelines are much more lenient which has allowed many struggling under rising, adjusting rate and payments and option to stabilize their loans allowing them to sleep better at night.

A refinance mortgage can also benefit those who bought their home utilizing a 1st and 2nd mortgage which at the time seemed like a good idea for many. In this very common situation a first mortgage has a lower rate, for example a 6.75% to carry the majority of the balance, while the second mortgage carries a smaller amount at a higher rate of 10%. Consolidating your first and second mortgage into one low rate can easily save homeowners a couple hundred dollars or more on monthly payments which allows them to refocus that savings into other necessities such as education/tuition costs and retirement portfolios, or even paying off more high interest debt.

During times of economic uncertainty it’s no surprise that homeowners are extra cautious about utilizing their home equity or refinancing their home loans. The truth is that there are clear cut benefits to a mortgage refinance which include paying-off harmful credit card debt, stabilizing your future by fixing your adjusting rates and payments, and by consolidating your first and second mortgages into one low monthly payment. Making the right financing decisions can open many doors of opportunity and utilizing your mortgage intelligently as a tool to encourage healthy financial growth is the perfect starting point.

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