If you on your home, you may have been intrigued by all of the advertising you hear for low interest rates and mortgage refinancing. With interest rates for home loans and mortgage refinance loans at an all-time low, banks are advertising and people are jumping on the refinancing bandwagon. If you have never done mortgage refinancing before, you may wonder what all the fuss is about and why a person would want to refinance their mortgage.
One of the first reasons to refinance your mortgage is to get a lower interest rate on your home loan. If you purchased a home at a rate that is at least 1/2 percent higher than the current mortgage rates, the total amount of interest you will end up paying over the course of your loan could be thousands of dollars less than if you don’t refinance.
Some people refinance to a shorter term, but with the lower rate, their payments do not go up. This is an excellent way to pay off your home more quickly and save thousands of dollars in interest.
Another great reason to do a mortgage refinance is to lower your monthly payments. With a lower rate, you will have a lower payment. In fact, many people have experienced life changes that have left them with a lower income than they previously had, and a lower payment may be the only way they can keep their house.
Another way to lower the payment through mortgage refinancing is to stretch the term of the loan back to 25 or 30 years so that the payments are spread out over time, which effectively lowers them.
You may even be able to get a bad credit mortgage refinance if your credit has suffered, and still get a lower rate than on your current mortgage through refinancing.
Many people who have had hits on their credit have felt like there is not much hope to adjust their payments, but with the current low interest rates and the amount of competition by lenders, you can get a bad credit mortgage loan with competitive rates. You may be eligible for a government loan modification program depending on why you are struggling to make the payments.
There are many reasons why people refinance their mortgages, and you may find that one of these reasons is right for you. If you are interested in getting a lower mortgage payment or a lower interest rate and in saving up to thousands of dollars on the total you will end up paying for your house, then a mortgage refinance may be right for you.