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A refinance could be your best financial move yet By Melissa Wirkus

As interest rates remain favorable for potential home buyers looking to take out a mortgage, homeowners with existing mortgages should also take advantage of the historic lows we are seeing and refinance.
The main goal of a refinance is to lock-in a lower interest rate and therefore have lower monthly payments for your mortgage. This is just one of the many benefits of a refinance.
But many homeowners are under the misconception that once they buy a home and take out their initial mortgage, they never have to review it or deal with it again. But this antiquated way of thinking will only cost these homeowners a lot more money in the long run.
Although a refinance is not always the right situation for every homeowner, there are many times when a refinance is the best possible move for a homeowner and will save them thousands of dollars.
A January 5, 2007 article from QuickenLoans and posted on Yahoo’s Real Estate page, “Mortgage myth: Never refinance your mortgage,” discusses why refinancing a mortgage could be a great financial move for many homeowners.
As discussed above, the most common reason people refinance is to lower their monthly mortgage payment.
“Let's say you got a loan with an interest rate at 7.5 percent; your loan amount was $100,000; and it's a traditional 30-year fixed. Your payment (without taxes and insurance) would be just under $700. Now, let's say rates have dropped down to 6.5 percent. If you were to refinance, your payment would drop to about $632.”
“Now that you've refinanced, you're keeping nearly $70 more in your pocket a month that you could use toward other bills or just extra spending money. Over a year, that adds up to $840! Perhaps you can finally take that vacation to the Bahamas after all.”
This freed-up cash can also be used to help fund a savings account or some other wealth-building investment; the options are endless.
And if you are one of the many homeowners across the U.S. who finds yourself in a rather unfavorable mortgage, you can always use this opportunity to refinance into a mortgage loan that better suits your needs.
If you are in an adjustable-rate mortgage and find yourself nearing a rate increase, now would be a great time to refinance into a fixed-rate mortgage or another type of ARM product.
Or, if you find yourself on the move often, you should also consider a refinance
“Even if you don't have to move a lot, the average American family moves every seven to nine years. Keeping a 30-year fixed rate mortgage doesn't make as much sense in these types of situations as having a shorter-term adjustable rate mortgage (ARM) because the rates for a 30-year fixed are often higher which means you're paying more. Why pay more when you don't have to?”
Also, if you need some cash for any reason, a refinance enables some homeowners to use the equity in their home.
“You might need to make home improvements or consolidate high-interest debt. Let's say there was a big storm that ripped through your neighborhood and now your roof is leaking. You realize you need to have the entire thing replaced. What do you do? Don't reach for that credit card, if you want to fix it. Credit cards carry higher interest rates than do mortgages.”
“The better solution is to refinance your mortgage to get cash out of your home using your home equity. Essentially, you get a new mortgage to pay off your old mortgage and you have extra money (taken from your home equity) to pay for home repairs or improvements or to pay off your debt.”
Although you may not think that it is the right time for you to refinance, you should talk to a mortgage coach at LEI to make sure this golden opportunity does not pass you by.

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