Mortgage Refinance Guide to Financial Peace

Mortgage Refinance Guide to Financial Peace



Are you looking for favorable rates and terms on your loan as your

monthly payment is on the higher side? 

Or are you looking to consolidate two loans into one so that you can pay

off faster? You will be able to achieve all this and more by refinancing your

mortgage. Mortgage

refinancebasically means to replace your current

mortgage with a new loan with a more favorable interest rate and terms that you

can afford to manage. This new loan is secured on the same property as your

current loan. The new loan funds are used to pay down the current mortgage

while any remaining money can be used to your best advantage.  Read on to find out the benefits of mortgage refinanceand

how to get payment assistance.



Is the question when and why to refinance my home on

your mind? These few reasons will help you to measure the advantages it has to

offer. Like; by refinancing you can save more, as lower rates usually mean

lower payments by extending the term. However, with an extended term, you will







be paying more in interest during the life of the loan.  Again if currently you have an

adjustable-rate mortgage (ARM) you may choose to refinance to get another ARM

with better terms and the loan may start out at a lower interest rate. Again

you would like to convert an ARM to fixed-rate mortgage (FRM). Another good

reason to consider refinance, is that you would like to get cash out from the

equity built up in your home so that when you refinance for an amount greater

than what you owe on your home, you can receive the difference in a cash

payment.



As we have considered the advantages of refinance, discussing when

not to consider it, will help you to decide better.  Refinancing is not a good idea when you have

had your mortgage for a long time as the proportion of your payment that is

credited to the principal of your loan increases each year, while the

proportion credited to the interest decreases each year. In the later years of

your mortgage, more of your payment applies to principal and helps build







equity. By refinancing late in your mortgage, you will restart the amortization

process, and most of your monthly payment will be credited to paying interest

again and not to building equity. Again, see if your current mortgage has a

prepayment penalty, a penalty which a lender charges if you pay off your

mortgage loan early and paying a prepayment penalty will increase the time it

will take to break-even when you calculate the costs of the refinance and the

monthly savings you expect to gain.



It is very common to pay 3 percent to 6 percent of your

outstanding principal in the form of refinance fees. This cost is in addition

to any prepayment penalties or other costs of paying off any mortgages you

might have. Now refinance fees vary from state to state and lender to lender.



Persevere and also be on the lookout for potential lenders in

the real world and online  until you

discover the lender that's right for you and ready to offer the best mortgage refi deals, your one stop

resource for saving money.