With the economy and housing market the way they are many people can save a lot of money by getting a home loan refinance. Millions of homeowners will easily be able to save hundreds of dollars per month, their home from being lost, or both. Here are 4 of the most popular and best reasons homeowners get a mortgage refinancing.
1. Switch from an ARM Loan to a Fixed Rate Mortgage
A lot of struggling homeowners, and those that just want to save money, will benefit from refinancing into a stable fixed rate mortgage. Many homeowners got themselves into adjusted rate mortgages when the housing market was booming and obtaining a large home loan was easy. Now though the market has changed. Many people would benefit from getting a stable home loan payment that does not vary month to month depending on factors that are out of their control. While some homeowners can benefit from an ARM loan the majority of people who are going to live in their home long term will be better off with a fixed rate mortgage.
2. Getting Lower Monthly Payments
There are a few different ways homeowners can lower their monthly home loan payments by refinancing. The most common way homeowners save money when refinancing is by getting a better interest rate. Interest rates that are just 1% - 2% lower than your current rate can provide huge savings over the course of a long term home loan. Also, homeowners will be able to lower their payments when refinancing is by extending the length of their home loan. Lengthening the mortgage will result in a homeowner paying more in the long run, but the monthly payments will be lowered.
3. Get Out of Paying Private Mortgage Insurance
A lot of homeowners, whether they know it or not, pay a monthly fee for PMI. Private mortgage insurance is typically needed when homeowners have less than stellar credit, or less than the typical 20% required down payment. A lot of people in recent years have gotten their home loan with little or no money down, but are paying a fee for it every month. Getting a mortgage refinancing will eliminate this private mortgage insurance and will save you money every month on an unnecessary fee.
4. Get Cash Back from a Home's Equity by Refinancing
A lot of people would like to use the value they have built up in their home (equity) as a source of cash. This can be done through a cash back mortgage refinancing. Nearly every mortgage lender and bank offers some type of cash back option that homeowners can use against their homes equity to get a large amount of money that can be used for anything. This money will need to be paid back of course, but it is generally at a much better interest rate than traditional personal loans. Also, many homeowners have actually seen the value of their home rise since purchasing it which will help them maximize their cash back mortgage refinancing options. This is a great way to obtain a lot of money, quickly, with great interest rates, terms, and conditions.
Mortgage refinance may not be the answer for every homeowner. However, with the housing market and economy in the shape they are in now, many people can benefit from getting one. Do not be a spectator and wait for things to magically fix or improve on their own. Take action now and get a mortgage refinance to improve your financial situation.