Lower your interest rate?

Why Refinance To A Lower Interest Rate?

The primary purpose of refinancing your home is to lower your interest rate. There are several reasons why you may want to consider refinancing your home in order to get a lower interest rate. Perhaps you are dealing with an adjustable rate mortgage (ARM) and you want something more stable or perhaps you have a fixed interest mortgage and you want to switch over to an adjustable rate one.

Reduce Monthly Mortgage Payments

One benefit of mortgage refinance programs is the lowering of the monthly mortgage payment. By lowering your monthly payment you can focus on saving more money, paying off other debt, or just ease the strain on your budget.

Repay Your Mortgage Faster

With a lower interest rate, you could actually pay off your mortgage at a quicker rate, putting the money you would have paid on interest to the balance of the loan.

Adjustable Mortgage Rate Is Changing

An adjustable mortgage rate fluctuates with the market and one good reason to refinance for a lower interest rate for home loan is to avoid increases in your payments.

Consolidate Debt (Cash Out Refinance)

Some people choose to get a lower home loan rate so they can consolidate their debt. This is often done through cash out refinance, which allows you to take equity out of your home and turn it into cash, adding the cash out amount to the balance of your mortgage. Consolidating debt enables you to make just one payment a month and pay one interest rate instead of multiple interests. This can be an effective way to eliminate high-interest credit card and other forms of financial debt.

Mortgage Refinance Programs

The type of refinance program you decide to go with will have a large impact on your life. It is important to remember that you should evaluate individual mortgage refinance programs carefully before making your choice.

For example, if you are living in your dream home and have no plans to moveat least for the next 20 years, you may want to look at a 15 year or a 30 year fixed mortgage. These are long-term mortgages that will allow you to spread your payments over a longer amount of time, lowering your interest rate.

Short term loans, i.e.; ARMs and hybrid ARMs, offer lower interest rate plans. Hybrid loans start out as fixed rate mortgages for the first 3-10 years and then transform into adjustable rate loans.

If your home's value has declined but you are still current on your mortgage payments, you may be able to qualify for the HARP 2.0 (Home Affordable Refinance Program). In order to apply for HARP, you will need to submit a loan application. If approved, HARP goes to an underwriter and you will have to pay refinance fees since it is essentially a new mortgage loan.