Reasons to Refinance

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Home-167734_1920Nearly everyone can think of the first good reason to refinance your current mortgage – to take advantage of a lower interest rate. But there are a few more you may not have been aware of – let’s take a look at them all:

  1. Lower Interest – Again, this is the main reason most people will refinance their mortgage. The going interest rate for a home mortgage at the end of 2010 was 5.9. However, thanks to the economic downturn and housing market crash, interest rates are even lower now. Keep in mind that not everyone will qualify for a lower interest rate, however, mainly because they don’t have enough equity built up in their home thanks to decreasing value.
  2. Different Type of Loan – Some home owners opt for an adjustable-rate mortgage rather than a fixed-rate mortgage at the beginning of their loan. This usually means a lower interest rate for them in the beginning but at the end of that adjustable term, it means a very large “balloon” payment that can be very difficult to pay.
  3. Cash Flow – This may not technically be referred to as a refinance, but it’s pretty darn close. Some home owners who are free of their mortgage may decide to take out another mortgage loan to get their hands on extra cash to buy another home or start a business.
  4. Divorce – Many times the spouse who is allowed to keep the home will refinance in order to remove the other spouse from the mortgage.

Regardless of your reasons for refinancing make sure do your homework and don’t get into a mess with a new mortgage. Talk to your mortgage broker or banker and get all of the information you need to make an educated decision.