The mortgage you started with when you first bought your home, may no longer suit your needs as time goes on. The markets change, and so does your personal situation. It is important to look at your mortgage on a regular basis and make sure your financing works best for where you are now. Refinancing can save you money, help you build wealth and move you closer to your goals - if you approach it in the right way. Having the right information is the key.
Refinancing is simply taking on a new mortgage to replace your existing mortgage. The process of applying and qualifying is similar to what you went through when you bought your home, though it is often easier now that you are already a home owner. Some of the reasons to refinance include:
To lower your interest rate and payments.
To shorten your loan term and pay your mortgage off early.
If your home has increased in value, you can refinance to take cash out for home improvement, college expenses, investments or whatever your needs may be.
You can restructure your debts with a refinance to save hundreds of dollars per month and get rid of your high interest credit card balances.
If you bought with a low down payment, you can refinance to get rid of mortgage insurance or higher rate second mortgages.
These are just a few reasons you may want to take on a new mortgage. It is important, though, to make sure you know why you are refinancing and to make sure the new mortgage will fit in with your over all goals. Too often, home owners make a decision without knowing how it will really affect them, and it can end up costing them thousands and setting them back financially.
Pete Thompson is a long time resident of the Chicago area, and has been a mortgage loan officer specializing in helping first-time home buyers since 1992. Go to http://www.ptmortgage.com for a Free copy of The Real World Home Buyer’s Guide – How to save thousands when buying a home and getting a mortgage.
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