7 Reasons to Refinance

1. Refinance  because Interest rates have dropped below your current mortgage rate
You want to lower your monthly payment. Keep in mind, if you plan to stay in your home for a relatively long time, the decrease in your monthly payment will help offset the costs associated with refinancing.

2. Refinance to lower the total cost of your loan by reducing the term
For example, if your current mortgage rate was 7.5% for 30 years and you refinanced at 6.5% for 15 years, your monthly payments might increase a small amount, but you would save tens of thousands of dollars on total interest over the course of the mortgage.

3. Refinance your Adjustable Rate Mortgage (ARM) that is about to go up and you want to lock in at a fixed rate
(Some ARMs come with a no-charge, lock-in feature; if yours doesn't, you may have to refinance to get a fixed rate.)

4. You want an Adjustable Rate Mortgage (ARM) with better features than your current loan.
Know the caps, or limits on the amount your interest rate or monthly payments can increase. You should also look at the indices that determine your overall rate. As the mortgage market changes it may be time to move to an ARM with more flexible features.

5. Refinance to Pay Off Credit Cards And Other Debt
The difference between credit card debt and a mortgage can, financially speaking, mean thousands of dollars. Why? Credit card debt is compounded where the interest on a mortgage is simple, and often tax deductible. Using the equity in your home rather than credit cards to finance expensive purchases can save you money paid in interest in the long run.
Refinance can make your debt tax deductible * Be sure to consult your tax advisor.

6. Refinance Home Improvements
If you choose cash-out refinance, you can use the money you receive to fund renovation and remodeling projects to add value to your home.

7. Refinance to Access Cash
Think of the equity in your home as a savings account that you could access through cash-out refinance. You may want to finance an important home improvement that will increase the value of your home, pay for college or pay off high interest credit card debt. Whatever your reason, this may be the right option for you.