All About Home Refinance Loans

Why Refinance?

To "Refinance" is to replace an existing mortgage with a new loan.

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The reasons and benefits of refinancing are:

• Reduce interest rate: When interest rates fall to lower levels than you have in an existing mortgage, refinancing can reduce the monthly payments and save money over the life of the loan.
• Convert from an adjustable rate mortgage (ARM) to a fixed rate mortgage. After the introductory teaser rate period is over, the interest on an ARM can escalate substantially and refinancing can reduce your monthly payments and save money over the life of the loan.
• Extend the Term: If you have already paid, for example, five years on your 30 year mortgage, you have reduced the principal and can refinance for another 30 year mortgage on a lower principal amount, reducing your monthly payments. However, the total interest paid over time will be greater.
• Shorten the Term: If your financial situation has improved, you may consider converting a 30-year fixed mortgage to a 15-year loan – your monthly payment is higher, but you save a bundle in the total interest over the life of the loan.
• Debt consolidation: Some refinance loans can be combined with the payment of other debts, such as credit card balances, student loans, home improvements, etc., in one lower-interest monthly payment and most mortgage refinancing loans are tax deductible.

Do Your Homework First

There are costs associated with refinance loans, similar to the closing costs of your mortgage. Make sure you find out the costs related to the process and calculate whether this initial cost will be justified by the long-term benefits of the loan. Make sure you will be able to repay the loan regularly and on time in order to get the reward of improved credit. Defaulting on a mortgage can result in losing your home and remains on your credit history for 10 years, making it almost impossible to secure any other loan.

At ParkAveCredit.com, we have access to the most current programs, with a wide spectrum of lending institutions, to meet your needs. Check out the programs offered by our partners to see how you can reduce your payments by refinancing your home loan.

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