Refinancing Home Mortgage

Should You Refinance Home Mortgage Interest Rates?
By Rony Walker

Why refinance? There are a number of reasons people refinance the loan on their homes. For some, it's a way to take advantage of lower interest rates. For others, it's a means for building equity on their homes faster. For a few, it's a way to tap into the equity they have accumulated in their homes.

If you're thinking to refinance your mortgage, consider first if refinancing is well worth the time and money that you would have to invest in the process.

The following are some of the reasons homeowners decide to refinance home mortgage interest rates.

1. Refinanced home mortgage interest rates are typically lower.

Homeowners opt to refinance their homes once interest rates dip. For example, if under your present mortgage term, you have to pay 8 percent, then a refinance home mortgage interest rate of 5 percent would certainly be preferable. Note, however, that refinancing does not come free of charge. Carefully negotiate your refinancing terms as closing fees might end up costing you more.

2. Refinancing home mortgage interest rates result in lower monthly payments.

Lenders who issue adjustable-rate mortgages, or ARMs, give out low initial rates to lure borrowers. However, these rates dramatically increase after a period of one to five years. Most homeowners who find themselves in this predicament opt to refinance home mortgage interest rates to lower their monthly payments.

3. Refinancing home mortgage interest rates give you a new repayment period.

When you refinance, your mortgage clock is rewound. Weigh your options carefully, however. While refinanced home mortgage interest rates will reduce your monthly payment, it will increase the amount of interest which you will be paying over your loan's lifetime.

4. Refinancing home mortgage interest rates reduces debt.

You could obtain a cash-out refinance by using the equity you have accumulated. What this means is that if you have a high-interest debt, you could save thousands of dollars because of the repayment. The problem with this, however, is that you are simply substituting one form of debt for another. In the end, you still owe someone something.

5. Refinancing home mortgage interest rates yield greater return on investment.

Refinancing your home mortgage interest rates could allow you to make other investments. How? Think of it this way. All your cash goes to house payment. Consequently, you don't have money to put into a prime investment market. If you refinance home mortgage interest rates, you could use the extra funds to set up an investment portfolio. Subsequently, not only would you be able to keep your house, you would have a long-term source of income as well.

Undoubtedly, there are merits to refinanced home mortgage interest rates. Refinancing can be quite costly, however, so you should consider all options and weigh the pros and cons carefully before deciding to go that route.

In the end, the question of whether to refinance or not is one you and you alone could answer.

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