1. I want to lower my interest rate -
You only should consider refinancing when you can lower your interest rate by at least 2%. At the moment interest rates are low, therefore it?s possible that you could save a lot by refinancing your mortgage!
2. To switch to a type of mortgage loan that is better -
If you have right now an adjustable rate mortgage (= ARM), you may want to switch to a fixed rate mortgage (= FRM) in order to lock in a low rate for a longer time. On the other hand, you may be able to decrease your current payments by switching from a FRM to ARM.
3. To avoid a ?balloon payment? -
Some mortgages have a large payment due at the end of the loan term (normally after 5-7 years). You may want to refinance your loan in order to forcome having to pay this balloon payment.
4. Stop paying private mortgage insurance -
A private mortgage insurance (= PMI) is certain cases required by lenders if you had to borrow more than 80% of the home?s sale price. If the home?s value has increased after a while, you can use this amount to refinance and stop paying PMI.
5. To cash out home equity -
Home equity is often used to finance a remodeling project, college tuition, car purchase, a vacation, etc. If your home?s value has increased, you can refinance to cash out this extra amount available.
6. To consolidate the debts I have -
If you have many high interest debts, you can save by consolidating these debts into a mortgage loan: Auto loans, credit cards, second mortgage loans & other debts can be included in your refinance!
LendAdvisors.com ? Blog that helps you with Real Estate, Mortgages & Refinance.
Source: [http://www.lendadvisors.com/2007/03/05/why-do-you-need-to-refinance/]
Source: http://refinance.maxmoneymarketing.com/debt/why-do-you-need-to-refinance/
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