10 Reasons to Refinance Your Home Now

1) Pay zero closing costs on some Refinancing Loans

This type of refinancing loan requires no extra fees to avail the new loan, though some loans may require a tiny fraction in fees. When the market rate for loans falls lower than the rate at which the debt was borrowed, it is high time for you to scout for a lender offering the best rates. Do not fall for lenders who market their product as zero cost loans but do not hold true to their claim. In addition, refinanced loans often include a appraisal fee. This refinance option will also help individuals who want to escape a failing market, or when you want to hold a house for a short time before flipping it. In such cases, the closing cost of loans may cripple a person from flipping the house in a short period.

2) Appraisal may not apply to your Refinance Loan

The present government approved several refinance programs to help struggling homeowners, such as:

FHA Streamline Refinance: For borrowers availing this refinance option, appraisals are not mandatory if the borrower does not use the property as their primary residence.

VA Loan Refinance: This refinance included reduced rates of interest with no appraisal.

HARP Refinance: The Home Affordable Refinance Program allows homeowners to avail lower interest rates with lower monthly payments, and accepts all loans to value without placing a cap at 125%.

USDA Home Loans: This refinance option does not require a credit report or an appraisal.

3) Benefits of Refinancing your Home Loans

To put it in technical terms, refinancing replaces your existing mortgage debt with another mortgage debt under different terms and conditions, often includes:

To avail better rates of interest by minimizing rates on monthly payments or reducing the overall term.

To amalgamate various debts into a single loan, this will influence interest rates and fees depending on the term of the loan. This is usually done by individuals in financial distress.

To bring down rates of the monthly repayment amount. This can be a viable option for individuals struggling to pay the mortgage among other dire financial needs.

To minimize the extent of risk on the loan, by shifting from a variable rate loan to a fixed-rate loan.

To procure emergency cash, by extending the term of the loan.

4) Consolidating Mortgages

When a borrower has a first and a second mortgage, refinancing will help in consolidating these two mortgages. Even if the borrower does not receive cash-out on the refinance, this will be considered as a cash-out payment, if the second mortgage was taken out within a 12 month period to that of the refinance. In addition, refinanced mortgages fall under the recourse debt category, which makes the borrower liable to default, but loans that have not been refinanced are non-recourse debt.

5) Paying up on points to Lower Interest Rates and Monthly Payments

Lenders who provide refinancing packages, take a certain percentage of the total loan amount as up-front payment. This is usually calculated as points or premiums, that is 1 point equals 1 percent of the total loan amount. Lenders follow certain formula's when refinancing loans, typically, lower interest rates of refinancing require more in up-front payments, and lower down payment would hike up interest rates. Certain lenders provide discounts by calculating negative points on the loan, this will include parts of the loan and not the loan as a whole. Paying up more points in up-front payments carries the most advantages, including lower monthly payments and lower interest rates. If your home is high in equity, you can cash out the equity in order to make larger up-front payments.

6) Get rid of Private Mortgage Insurance

If your home is high in equity, refinancing your home could mean the elimination of private mortgage insurance. This will drastically reduce monthly payments on your mortgage and save up on a whole lot of cash.

7) Manage a number of High-Interest Loans by consolidating them into a Single Low-Interest Loan

Modern forms of debt can be overwhelming; in the miniscule details you need to track to keep on top of things. Refinancing your loan and opting to consolidate your debt into a single low-interest loan, instead of managing several high-interest loans has its own benefits. If your house is high in equity, the extra cash from the refinance can be spent on any other debt you might have, in particular, high interest loans such as credit cards and auto loans.

8) Bring down overall Monthly Payments towards Debt

A refinance on your home will bring down your overall monthly payments towards debt, thus reducing the outflow of cash and possibly increase savings. Such refinances usually include lower interest rates by increasing the term of the loan. In addition, if your previous loan followed the variable rate, you can go in for a fixed-rate loan, thereby freeing some cash from the cycle of debt.

9) Make use of the Equity on your Home

Most homes rise in equity as the years progress, refinancing your loan will enable you to take premature advantage of the equity on your home. Refinance reduces monthly payments on a mortgage and allows you to cash-out equity on your house. The extra cash could help with renovating your home, paying for your child's college or even as down payment on a new business venture. During cash strapped times, understanding and taking advantage of the worth on your house will always work to your benefit.

10) Consult with a number of Lenders, before settling for a Refinance Loan.

There are refinance options with zero fees associated with refinancing, but these often include higher-interest rates than normal refinance package loans. When buying a refinance loan, talk to different lenders and understand the pros and cons of general plans offered by lenders. This will help you narrow down the search for a good refinance option, and weed out lenders who might be less than genuine in their plans.