When to Refinance | 1-800MyMoney.com

Reasons to Refinance - When to Refinance

BILLS: This is always a big reason to refinance- pay off bills and cut payments. Even if you have a good 1st mortgage rate now, if you have too many bills causing you pain and making your credit suffer, it is time for relief. Or you can also consider a 2nd mortgage and get up to $300,000 without touching your current first mortgage AND no equity required programs too! In California, with home values continuing to go up, a low rate second (2nd) mortgage may be the best solution. OR, if your existing first mortgage is less than $200,000 you may look at refinancing to pay off the bills with a new first.

HIGH RATE: You have a higher interest rate than is offered today and refinancing cuts your payments enough to make it worth your while OR you can get a shorter term, save tens of thousands of dollars. You may be able to keep you new payment almost the same as you are currently paying.

ADJUSTABLE MORTGAGE THAT IS FIXED FOR SHORT TERM: You took a 30-year loan that is fixed for 2, 3, 5 or even 7 years and then it becomes and adjustable rate. If rates are good then it may be time to lock in a fixed rate for 20, 25 or 30 years. This provides the peace of mind of your monthly payment never changing. Plus, if you have bills, you can consolidate them into one low monthly payment - lower than you now pay.

MORTGAGE LOAN LIMITS UP: As conditions warrant, the government raises the ceiling on what are known as conforming loans. Interest rates on conforming loans are lower interest rates than rates charged on jumbo loans, so that jumbo loan you got several years ago is now a conforming loan and can be refinanced for conventional rates. You can take advantage of this to also pay off some bills.

PAY OFF 2nd MORTGAGE: You have a fairly good 1st mortgage rate but you also have a much higher 2nd mortgage plus a few other bills. Refinancing could cut your payments and possibly even be able to cut your term to 25 years or even 20 years so you don't start over again with a 30-year loan.

YOUR MORTGAGE BALANCE DOWN: You have paid down your balance on a mortgage that was originally considered a jumbo, so even if loan limits were not raised, what used to be a jumbo loan is now at a conforming loan balance. Refinance for the lower interest rate, cut your loan term at the same time.

HOME VALUE UP: The economy has pushed the value of your home up and up. Now you have equity to consolidate car payments, charge cards, and other bills. You could either refinance your first mortgage and consolidate the bills, or take out a second mortgage and leave the first mortgage balance alone.