I. WHAT IS MORTGAGE REFINANCING?

Home Mortgage Refinancing is taking out a mortgage loan to pay off the existing mortgage(s). Future payments are made to the bank providing the refinance loan. . Typically, the choice to refinance is made when interest rates are lower than the original loan. Many people decide to refinance when interest rates have gone down, but it may or may not be a wise decision depending on your individual situation. It would be best to speak to a lender about the objective of the loan.

II. BENEFITS OF MORTGAGE REFINANCING

The general rule of thumb for mortgage refinancing: if the mortgage interest rate is at least two percent lower than the original mortgage loan, then it is beneficial to refinance. However, if the objective is just to lower the monthly payment for the mortgage, then a smaller decrease in the mortgage interest rate can still benefit the borrower because it will lower the monthly payment amount due to a decreased rate.

Some reasons for mortgage refinancing:

1. Lower monthly payment – with a lower interest rate, one pays less interest and if the time frame of the loan is extended, the monthly payment will decrease.

2. Debt Consolidation - believe it or not, many borrowers have multiple mortgages or various loans, a refinancing plan can consolidate the existing debt at a lower interest rate and can lower monthly payments.

3. Cash Flow Difficulty – refinancing/mortgage can provide available cash in as little as two weeks.