Refinancing Your Mortgage

If you currently have a mortgage for a home and are considering refinancing, now may be just the best time to do so. There are many reasons to consider refinancing your mortgage, and lots of advantages to each reason. Many people refinance because:

• They want to get a better interest rate: Interest rates are constantly on the move in the market, and they are often adjusting downward. You could save hundreds on your monthly payment if the rates have fallen enough since you first landed your current mortgage.
• They are struggling with their ARM: If you have an adjustable rate mortgage and the adjusting rates are playing havoc with your finances, making budgeting difficult, or even raising your mortgage payment so high you worry that you cannot meet it then refinancing may be just the thing for you. You can get mortgage counseling on refinancing your mortgage to a fixed rate loan and bask in the stability.
• They want to get a little extra cash: If you have some equity in your home, refinancing may be a way to access that equity immediately in the form of a cash payment from your lender. You can then use that extra money to pay for a new car, pay off bills, or even take the trip on a vacation to Disney World.
• They want to adjust their budget: Things change over time, certainly over the life of a 30 year mortgage. It is unlikely, in fact, that you will have the same job or position when you finish paying a standard 30 year mortgage than you had when you started it. For this reason, many people seek to refinance their mortgage to adjust to changes in their lifestyle or budget in order to make the mortgage more affordable.

The Mortgage Refinance Process

Refinancing a mortgage means seeking approval for a new loan just like you did when you first got your home. The approval process has to go through an escrow and closing just like back then as well. One significant difference is that the approval for a refinance doesn't require a down payment like your initial mortgage probably did (the house serves as the down payment), and you don't have to worry as much about qualifying if your credit score or income have taken a hit since you first landed the house.

Typically home refinances require that you have a certain percentage of equity in the home before you can be approved - the more equity that you have, the greater your chances of being approved and successfully refinancing the home. Mortgage counseling suggests that you first save up a cash reserve in order to pay for the closing costs on your refinance - it will help the process go much more quickly if you are prepared with this money up front rather than scrambling for it at the last minute.

When your mortgage refinance is complete you will have the satisfaction of paying a new rate, new monthly payment for new terms that you have set which are most compatible with your current lifestyle and financial situation.