What Are The Advantages Of Refinancing

What Are The Advantages Of Refinancing

One of the main advantages of refinancing regardless of equity is reducing an interest rate. Often, as people work through their careers and continue to make more money they are able to pay all their bills on time and thus increase their credit score. With this increase in credit comes the ability to procure loans at lower rates, and therefore many people refinance with their mortgage companies for this reason. A lower interest rate can have a profound effect on monthly payments, potentially saving you hundreds of dollars a year.

Second, many people refinance in order to obtain money for large purchases such as cars or to reduce credit card debt. The way they do this is by refinancing for the purpose of taking equity out of the home. A home equity line of credit is calculated as follows. First, the home is appraised. Second, the lender determines how much of a percentage of that appraisal they are willing to loan.

Finally, the balance owed on the original mortgage is subtracted. After that money is used to pay off the original mortgage, the remaining balance is loaned to the homeowner. Many people improve upon the condition of a home after they buy it. As such, they increase the value of the home. By doing so while making payments on a mortgage, these people are able to take out substantial home equity lines of credit as the difference between the appraised value of their home increases and the balance owed on a mortgage decreases.

• Help for Homeowners – There has been recent legislation regarding refinancing. Take a look and know your rights.
• Home is Where the Equity Is – An article on the importance and process of building equity.
• Home Affordable Refinance Program – New programs are available to help you refinance.
• Streamline Your FHA Mortgage – This specific type of loan can be extremely beneficial to the homeowner looking to refinance.
• Refinancing May be More Costly than You Think – The hidden costs and fees of refinancing a mortgage, even when there are lower interest rates.