REFINANCE
Why refinance your home?
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There will come a time in your life when it is a good idea to refinance your home. However, before you refinance, you need to determine if the market is right for refinancing, and if you are refinancing for the right reasons. It is also important to locate a lender who will work as your partner to meet all of your home refinance needs and assist you when you cry, "Help me refinance my home!"
Refinancing a home is not a decision to be taken lightly. With ARMs gone bad and a record number of foreclosures, refinancing can be a way to get some relief. However, there are many other reasons to refinance. Learn why people choose to refinance their homes, when it may not be the best decision, and whether it may be right for you.
Four Reasons to Refinance Your Home
There are many situations where refinancing a mortgage is a good decision. It can save your house, save you money, or help you with other financial needs. Read on to learn the four reasons to refinance your home.
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1. Saving Money When You Refinance Your Home
Refinancing can be an effective way to save money on your monthly mortgage payment. Refinancing can save you money by lowering the interest rate, lengthening the term of the mortgage , or helping you pay off high-interest rate debt at a lower cost.
2. Changing an ARM to a Fixed Rate Mortgage
A good reason to refinance can be when you have an adjustable rate mortgage (ARM) and you refinance to lock into a fixed-rate mortgage. This will protect you from an increase in future interest rates, which could make it harder for you to afford your mortgage. Many people are taking advantage of the low rates available to refinance their ARMs into a a fixed-rate loan in order to reduce the stress and worry that comes with the uncertainty of an adjustable rate loan. Moving into a fixed rate mortgage can help you avoid financial trouble before it starts.

3. Getting Money Out of Your Home
Another reason to refinance is to get money out of your house, which is known as a cash-out refinance. This type of refi allows you to access the equity in your house to use that money for other purposes. Many people do this to pay off other high-interest debts they may have. It is also a very popular choice for finally doing those improvements around the house. Of course, any time you take equity out of your house, you want to make sure you assess any possible risk involved and confirm that you are not putting your house in jeopardy.

4. Avoid Foreclosure with a Refi
\If you are on the brink of foreclosure and are desperate to save your home, refinancing may be the answer for you. Whenever you are having trouble paying your mortgage, it is always a good idea to approach your lender and discuss the issue with them. They may be open to helping you through a refi or a loan modification. This can help you lower your current interest rate, lock in a fixed rate, and/or change the length of the loan, lowering your monthly payment and making your mortgage more affordable and helping you avoid foreclosure. You can also talk with other lenders or mortgage brokers to see if they have programs available for you. The biggest obstacles are going to be whether you have enough equity in your home and if you have missed enough mortgage payments to disqualify you from the available programs. If you do not, you need to talk to your lender and review your options.
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Two Reasons Not to Refinance a Home
A refinance is not an easy fix to complicated problems, nor is it an ATM for making unneeded purchases. As with anything relating to mortgages or your house, you need to be smart about a refi and know when it is not the right decision.
1. When a Refinance Does Not Save You Money
Lower rates do not necessarily mean that a refinance will save you money. You need to thoroughly assess the situation and evaluate how much you will save, if anything. It is important to remember that with any mortgage, including the one you are about to refinance, there are always fees involved, such as closing costs. These can add up to several thousand dollars, which can prevent the refinanced loan from saving you money. You also need to consider how long you plan to stay in that specific house. If you plan to move in the near term, a refi may not save you money. Talk to a mortgage professional or trusted financial planner if you are not sure where you stand.

2. Cashing Out for Frivolous Purchases
We all would love to go on a two-week Caribbean vacation or
buy the luxury or sports car we have always dreamed of driving, but using a cash-out refi for such purchases is not a very smart choice. Once you get into the habit of using your mortgage as a way to pay for things you can not really afford, you run into the danger of going into debt you cannot handle or losing your home. Using equity for home improvement projects can increase the value of your house. Using equity for luxury purchases saps the value from your home.
There are four good reasons to refinance a mortgage, and there are valid reasons not refinance, too. Everyone’s situation is different, and it is important to analyze yours before making any big decisions about your home. If you use a refi wisely, you can benefit, but knowing when to say “no” can also be to your advantage.