Mortgage Refinancing - 3 Reasons to Refinance Your Home Mortgage Loan

There are a number of reasons for mortgage refinancing; the average American homeowner refinances their home mortgage every five years. If you are considering mortgage refinancing for any reason, doing your homework and comparison shopping from a variety of mortgage companies will help you avoid many expensive mistakes. Here are three good reasons for mortgage refinancing and several tips to help you avoid overpaying for that loan.

I. Mortgage Refinancing to Lower Your Monthly Payment Amount

Mortgage refinancing is one of the most cost effective ways to lower your monthly payment and free up cash in your budget for other reasons. There are dozens of mortgage refinancing options available for every financial situation. Choosing the right mortgage for your situation will save you thousands of dollars and many future headaches.

The best way to lower your monthly payment when mortgage refinancing is to qualify for a lower interest rate; however, if this is not possible you can still lower your payment by choosing a longer term length for your new loan. Term lengths as long as fifty years will allow you the longest payment possible; however, you will pay a more to the lender in finance charges for this extra time.

II. Mortgage Refinancing to Consolidate Your Bills and Pay off Debts

Mortgage refinancing can help you get control of your bills and pay off your debt. When consolidating your bills under your home loan you are simply borrowing more with your new mortgage than you owe on your existing loan. The difference between your new mortgage loan and what you owe will be paid to you at closing. You can use this money to pay off your existing debts, effectively consolidating them under your home. It is important to understand consolidating your bills does not eliminate debt; however, it simply moves what you around making it easier to manage. Once you consolidate your bills under your mortgage loan, the interest you pay on this debt becomes a tax deduction on your Federal Income Tax.

III. Safeguard Your Payment From Rising Interest Rates

If you used an Adjustable Rate Mortgage to purchase your home, mortgage refinancing with a fixed interest rate loan could give you the peace of mind you're looking for in a declining economy. If you have a low tolerance for risk when it comes to your mortgage payment, refinancing to a fixed interest rate loan could be the answer you need. Keep in mind that fixed interest rate mortgages are more expensive than Adjustable Rate Mortgages.

You can learn more about your mortgage refinancing options, including expensive mistakes to avoid by registering for a free, six-part, video tutorial.

This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Posted in: Mortgage,Reasons,Refinance,Refinancing