Mortgage Refinance: Should You Consider It?

Industry experts are going on and on about the low interest rates. In fact, the rates are so low that homeowners who already have loans are renegotiating their loans or refinancing them to take advantage of the low interest rates. This does sound great but will a mortgage refinance really work in your situation. Click here for some helpful tips.

Let's find out
You are right to be cautious. Refinancing is not a simple process. It is a major financial decision and you have to consider all factors before you proceed. To help you out, we've listed the major benefits you can get by refinancing your loan.

Flexibility in monthly payments -- By refinancing your loan, you can lower your monthly payments and increase the loan term. The opposite is also true. In case you want to clear your loan quickly, you can increase your monthly payments and shorten the loan term. Refinancing offers you this flexibility and you can ensure that your monthly payments are affordable and you do not miss payments.

Releases house equity -- Most homeowners have already paid off a part of their homes. As a result, you own a part of your home and this is called home equity. When you refinance your loan, you can access the equity you have in your home. You can take out a credit line on your home value and the payments you made on your mortgage.

Change in interest rates -- Mortgages taken in the pre-recession real estate market were based on a variable interest rate. As a result, when interest rates increased, monthly payments increase. However, with a refinance, you can convert a variable interest rate loan into a fixed interest rate loan. By doing this, you have a fixed monthly payment that is predictable and easy to pay.

More options -- Lenders are competing for business and they are more than likely to offer you great deals. Make sure you talk to at least three to five lenders and get competitive quotes from all of them. If possible, ask for a 'good faith quote' from the lenders. This quote will contain a details list of the payments you will have to make to the lender along with the applicable interest rate and additional payments. These documents will give you an instant idea of what you can get from a lender. It also acts as a bargaining tool as you ask your original lender to offer a better deal based on these quotes.

Consolidation -- Not many people are aware of this benefit. With a refinance, you can consolidate your second mortgage or other loans into a single umbrella payment. You could end up saving a lot of money by bunching your loans with a single lender.

Mortgage refinance may be complex but a reputable lender can easily guide you on the process. They will even tell you whether a refinancing is a good idea in your particular care. You have the luxury of time with refinancing as well. As interest rates are low and stable, you can walk away from any kind of deal if you don't like the terms. In the end, the decision is yours.

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