Homeowners may wonder if they should refinance their current home. Refinancing means to repay a current mortgage with a second mortgage. This may not seem to make sense, but there are benefits if the correct refinancing is done. Refinancing can save the homeowner a considerable amount of money. there are several circumstances when refinancing may be to your benefit. Some of the reasons to refinance your existing mortgage include the following.
Getting a Better Interest Rate
If your financial status has changed you may qualify for a better interest rate on your mortgage. Mortgage interest rates are at historically low levels. If you are paying a higher interest rate now you could very well save by refinancing your existing loan. Qualifying for a better interest rate will save you money by lowering your monthly payment and paying less to the lender over the life of the mortgage.
Switch to a Fixed Interest Rate
If you financed your home with an adjustable rate mortgage and are concerned about rising interest rates you could find yourself peace of mind by refinancing to a fixed interest rate mortgage. By refinancing your mortgage to a fixed interest rate you will not have to worry about the monthly payment going up when the lender adjusts your mortgage.
Lower Your Monthly Payment
Homeowners refinance to lower the monthly payment and ease their cash flow situation. You would do this by choosing a mortgage with a longer term, choosing a loan that offers payment options, and qualifying for a lower interest rate.