Refinance Mortgage In Your Home To Save And Pay Off Mortgage

2007-03-08 10:33:40

( Financial )



A refinanced mortgage pays off the existing mortgage in your home and may even return equity to you. You can refinance mortgage in your home when you need to raise money for some purpose or to take advantage of lower interest rates.

As you pay off the principal on your mortgage, you build up equity. This equity remains locked in until you sell your home. You can release this equity by refinancing mortgages for one with a higher principal. Should you decide to refinance mortgage in your home, you will find out that a loan secured by your home equity is less expensive than other types of loan.

If the current mortgage rate in the market is 1 to 2 percent lower than your existing rate, you’ll reduce your monthly mortgage payment and save on interest payments when you refinance your mortgage. You might view refinancing mortgages as similar to an investment. That is, the cost of refinancing is your investment, and the interest you save is the return on your investment.

In deciding whether to refinance mortgage in your home, you have to consider the length of time you plan to stay. If you plan to move out within the next two years, you may be better off not refinancing at all. It wouldn’t make sense to refinance your mortgage without recovering the cost incurred in refinancing mortgages and without making a reasonable return on your investment.

If you intend to sell your home, refinancing mortgages can even be a good idea. If the rates are low, you may obtain a loan and have it assumed by the buyer. When the rates increase before the sale, or if the mortgage loans are no longer easy to acquire, an assumable loan can add to the resale value of your home.

You must not forget that the costs for refinancing mortgages differ from one mortgage refinancing company to another. It would be wise to see a lending company representative for more information if you consider availing the advantages of refinancing mortgages.


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