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Why Should You Consider Refinancing?

If you are a homeowner, you are probably used to paying a certain mortgage payment ever month. But have you considered the option of lowering your payment or reducing the length of your term? Refinancing may be a great way to reduce your interest payments or loan term, but because refinancing involves a fee, you will want to make sure that it will benefit you in the long run. So why should you refinance?

One of the main reasons that borrowers refinance is to obtain a lower fixed mortgage rate. If you are following current mortgage rates and have noticed that rates have dropped since you first took out your fixed-rate mortgage, refinancing may offer the opportunity to make much lower monthly payments. Another reason that people refinance is to switch to either a fixed-rate mortgage or an adjustable-rate mortgage.

If you are a borrower with an adjustable-rate mortgage, you might want to switch to a fixed-rate to reduce the stress of rate changes. However, an adjustable-rate mortgage can be a way to reduce a monthly payment. Also, refinancing can offer another option for reducing monthly payments by switching to a longer loan term. You may also prefer to do the opposite, switch to a shorter loan term for high monthly payments, but less interest.

There are many reasons to refinance, but making sure you plan to stay in the home you refinance is important. Because refinancing involves fees, you may not see benefits from refinancing unless you plan to stay in your home for an extended period of time. Make sure to talk to a qualified mortgage consultant to figure out what is the best option for you.

ERATE is comprised of current mortgage rates loan experts at every level within the company. For more info please visit at ( http://www.erate.com/ ). Ryan Coisson is a freelance writer.

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