Wednesday, March 10, 2010

Is Refinancing an Option for You?

The economy is better but for many families their budget is tight. To make space, many Americans are in the position of having to lower their monthly mortgage through refinancing.

Probably no sector of the economy has been harder hit in the past year than the mortgage industry. The good news is that banks and lending institutions are now able to make loans that allow for mortgage refinancing once again.

Before you make a refinancing decision are a few things to consider.

Mortgage Refinancing Question #1
Should you refinance?
Do you have an adjustable rate mortgage (ARM)? Refinancing can lock in a set interest rate for the life of your loan. You won’t have to worry about high interest rates increasing your payments. ARM loans are adjusted annually. Budgeting is easier when you don’t have the stress of payment increases.

Mortgage Refinancing Question #2
Do you need more space in your monthly budget? Under the right circumstances refinancing can substantially lower your monthly mortgage payment.

Mortgage Refinancing Question #3
Has your income increased?
If you have a new higher paying job or if paying off student loans has given you more disposable income refinancing might be right for you. A higher payment for fewer years can save you thousands of dollars in interest fees alone.

Mortgage Refinancing Question #4
Are you trying to cover a major expense?
Refinancing your home can give you extra cash for unexpected expenses. Borrowing against the equity in your home can raise your payment. At the same time it can give you the help you need to pay off medical bills or other sudden expenses.

Mortgage Refinancing Question #5
Do you need debt consolidation?
If so, refinancing your home may make sense. Borrowing against the equity in your home can help you pay off high interest credit cards or other debt. Your mortgage payment may go up but may be offset by the savings you will see from paying off the other debt.

Mortgage Refinancing Question #6
Has there been a change in your credit rating?
New borrowers and those with blemished credit generally pay more in interest charges. Refinancing may make sense if your credit has improved or better established.

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