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Seize The Right Time To Refinance
by Zoe Tiga
http://www.healrefinance.com

Do you recognize the right time to refinance your home loan?
Some homeowners refer to the "down two points" rule to
identify when to refinance. This rules takes into account
the difference between their current interest rate and the
going rate. However, this rule doesn't apply to every
homeowner's mortgage; your decision to refinance - which
entails taking out a new mortgage loan to cover an existing
mortgage - should be based on your circumstances and weighed
carefully.

A refinance loan is really a second mortgage. When you
refinance your initial loan, you are borrowing money to pay
off your first loan and then starting payments on another
loan. The second loan ideally comes with a lesser monthly
mortgage payment and lower interest rate. Many homeowners
use the opportunity to refinance to use their built up
equity for other reasons than reapplying into their new
loan. Equity is the amount of the loan that you~ve paid off
and is cashed out to you when you sell the home or
refinance. Many people use this equity toward financing
down payment on another home or affording retirement. The
use of this savings must be used carefully. Most experts
agree that the equity or "cash out" should be put back into
the home. If you do not reapply your cash out into the
second mortgage, you will have to wait longer to recoup your
losses.

A refinanced loan can feel like a gift from heaven since the
lowered monthly costs can help you gain access to savings
that can pay off other monthly expenses. You usually have
to dip into your existing equity to cover refinancing
related closing costs and fees. However, many people find
that they can recoup this loss fairly quickly. Since a
lower interest rate equates to a lower monthly mortgage
payment, wise homeowners will apply this savings in the
refinanced loan. In many situations, refinancing can
actually trim thousands off your repayment loan and hundreds
off your monthly mortgage payment due to a lower interest
rate. This saving can mean a lot to someone who's
struggling to meet monthly payments.

An online refinance calculator is a handy tool to help
calculate your savings by refinancing your loan at a lower
rate. Some homeowners take advantage of the lower monthly
payment by continuing to pay their previous monthly amount.
This rebuilds their equity even faster. For some
homeowners, they prefer to apply their freed cash into home
improvement projects. If the project actually improves the
value of the home, this too is a wise way to use your "cash
out" equity. While home improvement projects improve your
lifestyle, these projects allow you to sell your home at a
higher price and receive more equity out of your sold loan.

Before refinancing, seek strong advise and research
information online at a trustworthy real estate website.
Then, contact an agent to discuss options that work in your
favor.

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