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Refinancing Your Mortgage: Is It The Right Option For You?

Mortgage refinancing is an option for many homebuyers who pay interest rates 2-3% or more than they can find today, or who need extra cash. Were you a first-time homebuyer or did you have bad credit the last time you got a loan? You are now on your feet and earning a salary that could help you receive the best interest rates. You may be looking to refinance your mortgage so you can free up some funds for a new car or for educational purposes. There are many options available when refinancing.

Before deciding if refinancing is right for you, take a look at your current
financial situation. Do you have an adjustable rate loan or a fixed rate loan? How long do you plan to be home after getting
your new mortgage? What is your ultimate goal? Most people want to refinance so they can access more money now.
Refinancing is a great solution, but it is
is refinancing your loan the right solution for you?

The first step is to contact your lender and find out how much you will pay each month.
is now. It’s also helpful to find out how much of your mortgage you’ve paid toward principal. Since you will be refinancing the remaining amount of the mortgage principal and not refinancing the original amount of the mortgage, it is very important to know how much
remains main. If you plan to stay in your home for a period of time and
you still have considerable equity left on your loan, then a mortgage refinance can
be a good option for you if interest rates are lower than when you got your
last loan.

As with most conventional loans, refinancing offers similar options for fixed-rate and adjustable-rate mortgages and 10- to 40-year loans. Be sure to
review with your mortgage lender the reasons why you are interested in refinancing; Do you need to refinance to get cash for home improvements or a
new car purchase? These are important factors for your lender to consider when deciding how to refinance your mortgage.

Another factor that determines whether borrowers refinance is interest rates. Current mortgage interest rates can rise, and this often scares refinancing borrowers with ARMs because they fear adjustable rates will rise after they refinance. It is difficult to assess what will happen to adjustable refinance mortgage interest rates in the next few years. If you refinance into a fixed-rate mortgage during a period of high interest rates, then when interest rates drop again, you find yourself stuck with a high fixed-rate mortgage and another decision about whether or not to refinance again. Of course, the only sure way to know if you should apply for a
refinancing is evaluating your reasons for refinancing and how it will affect you in the future.

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