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Refinancing your Mortgage - Is it Possible



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By : Flynna Jones    99 or more times read
There are several reasons why homeowners resort of refinancing their mortgage. A study shows that in the U.S. homeowners resort to refinancing their mortgage every four years. But for whatever reason that this is so, the cause can be one or several of the following:

Interest rates -

When they took out their first mortgage loan, they availed it on an adjustable-rate mortgage or (ARM). And this is not always ideal; and so they want to convert to a fixed rate loan. In this way they lock the interest rate to a fix rate and do not have to worry for any future any interest hike.

The monthly payment is too bitter for the budget to take

As a paying home owner, you might want to consider lowering the monthly payment to a more affordable amount in order to cope with your budget. Although this can cause you more in the long run, because of the extended term, at least your budget will have a more breathing space.

The adjustable rate mortgage is the culprit -

It is possible that when you took out the mortgage loan the ARM initial rate was very enticing and the monthly payments were low compared with the fixed rate loan. But sad to say that most ARM are having an annual adjustments which means that if the interest rate is hiked so too your monthly payments. You can remedy this by converting to a fixed rate loan through refinancing; or, if you wish you can refinance with another ARM that has a limited interest rate increase.

Your credit score has somewhat picked up -

At the time you took out the mortgage, perhaps your credit standing was in bad shape, or maybe you have little history of credit. Your credit score was the main factor in considering the interest rate on your mortgage, maybe the lender gave you and high interest rate at that time when you were having a bad time with your credit. Now that your score has improved, you can avail of a better rate through refinancing.

Your income have improved recently -

With this improvement in your income, you can now refinance your mortgage with a shorter term. Instead of a 30 year amortization, you can convert it to a 15 year loan in which case can save you lots of money on interest payments.

The equity on your home has reached 20% -

If you obtained your mortgage with a PMI because of lower down payment, you can request your lender to cancel the PMI payments if your equity exceeds 20%; this is perhaps due to the price increased of houses. If the lender will not give in to your request for cancellation of the PMI payment, you can resort to refinancing. Your new loan should be at least 80% of the appraised value of your home. If this happens, you will be spared from paying PMI.

You have other debts that you want to consolidate into one

If you have other debts to pay, and you have a larger equity on your home by now, you can consider refinancing with a negotiated low interest rate to help you pay the other debts with the additional cash you can obtain from the new loan.

Remember, refinancing your mortgage can benefit you if your situation warrants it.
Encinitas Affordable Homes for Sale, Fallbrook Affordable Homes for Sale and Imperial Beach Oceanfront Real Estate can give you great ideas on real estate properties for sale.

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