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By Sean A. Kelly

Getting a home loan to pay for your new house is not easy. Thorough research has to be done in order for you to get the best deal. Once you’ve obtained the loan, everything seems to fall into place. You’ve moved into your new home and you are now comfortably making the expected monthly payments to your mortgage provider. After a few years you decide that you want more to live on every month. Instead of spending so much money paying off your home loan, you want to have some spare cash that you could save up for emergencies or family crises. So you decide that it is time to refinance your home.

Basically you already know what refinancing means. In short, you will be applying for a new loan in place of your existing loan to reduce the interest rate and possibly save more money along the way. But is that applicable to every case? Is refinancing the right strategy for you? The first thing you need to be clear about is the reason you want to refinance your home. If you wish to reduce the amount you pay every month and at the same time reduce the interest rate of your loan, refinancing is definitely the smart way to do it. Most professional financial advisors would advise against refinancing if you wish to do it to consolidate another debt; more so if it is an unsecured debt like credit card debts. If you are currently on an adjustable-rate mortgage, refinancing your home loan to a fixed-rate mortgage will not just reduce the interest rate but you will not have to worry about rate fluctuations.

Once you have established the reasons for refinancing your property, you will probably ask yourself the inevitable question. ‘Is there any risk if I refinance my home loan now?’ There is always a risk when you put up your home as collateral for any loan, which is exactly what you will be doing once you sign up for a refinancing program. However, it is always more dangerous if you are refinancing your home to pay off your credit card or any other unsecured debts. So it is advisable that you make sure you know what you are getting yourself into and take only calculated risks. After all you would not want to lose your home over credit card debts.

Finding the right mortgage provider is no easy task. With so many scams happening all over the country, you don’t really know who to trust. To avoid being duped, why don’t you just stick with what you know? The mortgage provider for your current home loan already has your records with them and you know that they are legitimate based on your experience with them. By going back to the same home loan provider you will most probably get better deals especially if you have a good track record. The lender will definitely notice if you have been consistently making payments without fail. That goes onto your record and this may help in their evaluation to approve your refinance application and reduce your interest rates significantly. Sometimes they may even waive certain fees so you will end up saving more money.

At the same time, it wouldn’t hurt if you are to venture out and go shopping for mortgage providers. Do not forget to ask for written information and if possible, get them to communicate with you via email only. You definitely would not want them calling you day and night trying to convince you that their program is the best there is. List down the pros and cons of every provider until you fully understand their terms and are satisfied with the deal they are offering.

Another aspect that you need to consider is if it is the right time for you to refinance home mortgage at this point of your life. There is no simple way of predicting or knowing when is the right time for you to refinance but if you have a good to excellent credit score, you will not have too much to worry about. Economic downturn is also a good time for you to start refinancing your properties as the interest rate during this time will be significantly low. If you just bought your house a couple of years ago, refinancing it will not be a smart move. It is better if you wait until at least 4 years to even think about refinancing your home.

Finally, you may need to remember that no two refinance cases are 100% identical. There is no one-size-fits-all formula to solving your home loan issues. So it is advisable for you to get professional financial advisors to help you consider all available options instead of heading straight to refinancing. Although refinancing is the most common way to reduce your interest rates, there might be other solutions that will serve your purpose even better. so do not be ashamed and get your advisors to give you all the answers you need to enable you to make a decision.

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