Refinance Your Mortgage
When you first negotiate the terms of your mortgage it can be a very dizzying experience. If you are new to the mortgage game it can be tough to make the decisions. It is not out of the realm of possibility that you may make a wrong decision. Perhaps you chose an adjustable rate mortgage but the mortgage rate keeps increasing and you can’t handle the thought of your interest rate being in the hands of an index. Maybe your monthly payments are way too high and you need to lower them. It can be hard to make all the right decisions when you are starting up, but luckily you can refinance your mortgage.
When you choose to refinance your mortgage you can change your interest rate to either an adjustable rate mortgage or a fixed rate mortgage depending on what you want. You can also lower your monthly payment. When you get your mortgage refinanced you go to another company, different then the one that originally issued you your mortgage, and refinance your mortgage. The refinance company will pay off your current mortgage while you pay your refinances. When you get your mortgage refinanced you will usually have the length of your mortgage extended, which is what causes your monthly payment to decrease. Although you may be weary about extending your mortgage it can really help you save money. For example:
If you bought a $220,000 house in 2000 and took out a 30 year mortgage with an 8.5% interest rate and a $20,000 down payment your monthly payment would be around $1,537.83. If after three years you refinanced with a 30 year refinance loan at a 7.0% interest rate your monthly payment would fall to $1,297.68. By extending your mortgage for three more years you have lowered your monthly payment by $240.15 a month.
Refinance can help you save money today so you can make other payments as well as change what type of interest rate you have. Refinancing is very popular today and it is not uncommon for people to refinance after spending only a few years in their house.