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January 18, 2013
woman_presenting_a_homeMortgage rates have remained at all time lows over the last several months, which has led many homeowners to consider refinancing their home loans. But is it the right time for you to take advantage of refinancing?

It is important to take into account how long you intend to stay in your home and what your goals are before you begin the process to ensure it makes financial sense.  Here are four good reasons you may want to consider refinancing.

1.  Get a Lower Mortgage Rate

Market conditions for mortgage rates are optimal. If you purchased at a higher rate or have significantly improved your credit score, you may be able to lower your interest rate, which will lower your monthly payments and allow you to build equity in your home more quickly.

2.  Changing from an Adjustable-Rate Mortgage to a Fixed-Rate

If you have an adjustable-rate mortgage (ARM), your payment will change from month to month along with interest rates. Switching to a fixed rate mortgage while interest rates are low can ensure your rates stay low and allow you to better plan financially for future payments.

3.  Getting Cash Out from Built-Up Equity

If market values have improved since you purchased, you may have some built up equity in your home (the dollar value difference between what you owe and what your home is worth). If this is the case, you have the potential to refinance and pull a line of credit from your home to use for things such as home improvements, debt consolidation, or your child’s college tuition.

4.  Adjusting the Length of Your Mortgage

Mortgages are usually structured as 15year and 30year terms. If you are currently on a 15year and want to reduce your monthly payment, you can increase the length of your loan. On the flip side, if you are on a 30year and are interested in building equity more quickly, getting a lower interest rate, or paying off your mortgage more quickly, you can refinance into a 15year.

When you refinance, you pay off your existing mortgage and create a new one. It is wise to double check and make sure there are no prepayment penalties or other costs associated with paying off your current mortgage.

There are also costs that are built into closing on a new loan. Take into account the fees you might accrue such as application fees, appraisal fees, loan origination fees, inspection fees and other related closing costs to determine if refinancing will result in a net positive benefit for you.

If you’re currently planning to purchase, refinance, or learn more about mortgage rates, simply fill out our Fast Response form or give us a call at 888-644-1999.  Our experienced mortgage professionals would love to sit down and discuss your needs. We look forward to hearing from you!

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