Mortgage Refinance | Mortgage Helper

In the past 30 years, interest rates have ebbed and flowed significantly in a financial tide of home mortgage offerings. Near the beginning of the 1980s, for example, rates for traditional 30 year, fixed rate mortgages were around 18 percent. Right now, though, we’re seeing rates for the same type of loan around 5 percent - and on some days recently, in the 4 percent range.

Many home owners who bought when rates were sky-high are now considering refinancing in order to reap the benefit of today’s lower rates. If you’re one of these people, know that there are some costs involved in refinancing your home, such as an appraisal, title insurance, and a loan origination fee, just to name a few. To figure out whether these costs will balance out with the potential money you can save by refinancing, you can use the general rule of thumb called the 2 percent rule. In plain English, this rule suggests that the percentage difference between the current rate you have on your loan and the new rate being offered should be at least 2 points. So, if you were one of those borrowers in the 1980s who got a rate in the teens (and you can get a rate now for around 5 percent), it would make pretty good sense to refinance.

I’ve included below 3 benefits for refinancing with a lower rate:

1) Lowering monthly payments - By lowering the rate of your loan, you can see a significant difference in your monthly mortgage payment. And, every little bit adds up. Some borrowers who refinance can save thousands of dollars over the course of their loan period. How much you save, though, completely depends on your numbers. So, be sure to talk with a mortgage specialist who can do the number crunching for you to see how much you can potentially save by refinancing.

2) Changing the type of loan you have - Some borrowers choose to refinance even if they won’t save any money by doing so. Think of the many borrowers who got an adjustable rate mortgage. We’re seeing a lot of these borrowers refinancing simply to switch to the fixed rate mortgages. Also, some borrowers who have a balloon worked into their mortgage choose to refinance when it’s gets closer to the time to make that bulk payment.

3) Getting money from your equity - If you’ve been in your home for ten or more years, you probably have a good bit of equity due to the overall appreciation of your home (even with the current dip in home values) and to the fact that you’ve been making those monthly payments for some time. For this reason, some borrowers opt to pull money out when they refinance their mortgage in order to help with retirement or with their children’s costs for college.

If you’re considering refinancing your home, be sure to talk with a home loan professional - someone experienced in refinancing who can sit down with you and go over your numbers and the options available to you. And, know that each situation is different. Your lender should be able to go over short-term and long-term benefits (or consequences) that are specific to you and geared towards your financial future.

If you are a homeowner and you’ve been paying on your home for some time, you may want to consider going with a mortgage refinance. You’ve probaby asked yourself this question-should I refinance my loan? Today there are some times when it definitely would make sense to go with a refinance for your home mortgage. Of course it is not always the right choice for everyone, but there are some advantages to getting one and some ways that it can help you out. You’ll find that this is an especially great option for you if you are trying to get out of debt. Everyone has a financial situation that is a bit different, so you’ll want to consider a refinance carefully before you make your final decision. However, there are a variety of different reasons that you should definitely consider going with a mortgage finance. Here are just a few of those reasons to consider.

Go From an ARM to a Fixed Rate

First of all, if you happen to have an ARM, otherwise known as an Adjustable rate Mortgage, you may want to go with a mortgage refinance. Many people today are suffering because they have ARM mortgages that are cosign them a huge amount of money. Sometimes you may end up going with an ARM mortgage when rates are low and it may work out okay, but when the rates go up and it adjusts to a higher rate, you’ll begin to spend a whole lot more money on your mortgage each month. If this is happening to you, then you should definitely consider refinancing and going with a fixed rate mortgage that will save you a whole lot of money in the long run. Of course if you are getting ready to sell, this may not be the right option, but if you plan on keeping your home for quite awhile, this can be a smart move on your part.

Take Advantage of Lower Interest Rates

You’ll also find that another great reason to go ahead and refinance your mortgage is to take advantage of lower interest rates. If you have a high interest rate that is locked in on your mortgage and rates go down on mortgages, then this can be a great time for you to go ahead and refinance. Lower rates will save you a huge amount of money over time as a home owner. Not only will you end up saving on the amount of interest that you pay, but if you are able to take advantage of lower rates, you’ll be able to have a lower payment as well, which is really important.

Lower The Monthly Payment You Pay Each Month

Going with a refinance on your home mortgage is a great idea if you will be able to lower your monthly payment. Those payments can be nasty and even if you can only lower the interest rate a small amount, you can really end up lowering the amount that you end up paying on your mortgage each month. Changing the term of your mortgage can also help you to end up paying a smaller payment each month as well. Also, another option that you may have is going with an interest only loan, and this can be a huge help and will help you to save on those monthly payments.

Consolidate and Pay Off Debt

Debt consolidation is another great reason to consider going with a refinance or consolidation loans. A mortgage refinance may help you to get some extra cash so that you are able to take that money and then pay off the debt that you have. If you are over your head in debt and looking for a way to get out, this is definitely a great option that you should consider. It’s important that you work to pay off debt, and if you can refinance or take out a debt consolidation loan to help, then this can be a great option for you.

Get Cash From the Equity in Your Home

Of course another option that you have is that you can get cash from the equity in your home as well. This is also a great reason that you may want to go with a homeowner refinance. While you can benefit from lower interest rates and a lower payment, it can be nice to have some cash from the equity in you home. Some people end up using it to improve their home, while there are other people that use it to take a nice vacation, purchase a new car, or just to pay off debts.