4 Reasons to Refinance Your Mortgage Loan

Posted by  on Apr 28, 2010

Low refinance rates aren't the only reason to consider refinancing a home loan. Consider some of the following reasons it may make sense to do a mortgage refinance.

  1. Your household income has changed and you need to refinance to reduce your monthly payments.
    Many Americans are in the same boat. A drop in income is a red flag to mortgage lenders, but you may be able to qualify for refinancing if you still have a enough income to cover the new loan payments and a high credit score.
  2. You want to refinance your 30-year mortgage loan to a 15-year loan.
    Many refinance into a 15-year mortgage loan so they can pay off their house sooner and pay less interest. Depending upon the amount of equity you have in the property, you could end up with higher monthly payments on your mortgage loan. Make sure you have enough income to cover the new payments and other household expenses.
  3. A refinance could help you pay off credit card debt, an auto loan, or a second mortgage on your home.
    Consolidating your bills can be helpful for getting debt under control. But a consolidation plan is effective only if you stop running up new debt. If you are struggling with debt, talk with a debt counselor before taking the step of applying for refinancing.
  4. Refinancing could allow you to pay off a home equity line of credit (HELOC).
    Getting rid of a HELOC can take away the temptation to spend. Also, many lenders have cracked down on customers with HELOCs by decreasing credit lines or freezing them. Paying off a HELOC can free you up from unfair restrictions by lenders.

Refinancing mortgages has gotten tougher as mortgage lenders are cautious about extending credit to many people. You can get an idea of whether or not you might qualify for a home refinance by comparing mortgage quotes from several lenders.


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