MORTGAGE REFINANCE

In terms of refinancing when it comes to mortgages, there are 3 main factors to be considered:

1. Debt Consolidation: In the case of debt consolidation, the object is to unite debts into one system. In an age where consumer spending is dominated by credit, the average credit card or personal loan has an annual percentage rate of 18-22%. By consolidating the credit card payments with the loan, consumers are freed to use their savings for other purposes.

2. Lowering Interest Rate and Loan Term: Simply stated, lowered rates breed lower payments. In some cases such a lowering of payments produces a domino effect in which homeowners are able to reduce their loan term, keeping their payments as reasonable as possible. Lowering both the monthly principal and interest payments puts you in a situation to add the recognized savings to your payment, going directly to the principal. Any payment made that is extra from the minimum amount due helps to pay the loan off much faster, possibly saving thousands of dollars in the process.

E.G:

Jon takes out a house mortgage loan of $80,000 at 12% interest to be paid over the course of 30 years. Jon's monthly principal and interest payment is $822. If Jon were to add a dollar a day to his payments, he would pay off his loan faster and save thousands of dollars in interest. If Jon were to add $31 on top of the monthly mortgages in the given scenario, he would pay off his debt 7 years earlier and save approximately $58,828.

3. Cash Out: In a booming real estate market, homeowners would be wise to further the appreciation of the value of their property. To do this, homeowners refinance in effort to gain the money needed for the allowance of home improvements. A low home interest rate provides more "bang for your buck" than does a high interest credit card or personal loan.