Change happens. Maybe you bought your home right after college, before you had a decent credit history, and didn't receive the best interest rate available. Perhaps mortgage loan rates were high when you had to relocate to a new city. Interest rates can change dramatically over the years. Taking advantage of a lower rate through a mortgage refinance can have an equally dramatic effect on your monthly payments and on the interest you'll pay over the life of your loan. When your circumstances change, you can change with them.

Get the Terms You Want

Home refinancing lets you get out of a loan with parameters that no longer suit you. If you want to save money on the interest you pay in the long run, you can shorten the loan's term and build up equity more quickly. On the other hand, if you want to lower your monthly bill, you can lengthen the term. An adjustable rate loan can be exchanged for one with a low, locked-in rate. And if you didn't make a 20 percent down payment to begin with, a mortgage refinance can help you drop your Private Mortgage Insurance (PMI) payments if your home has appreciated significantly in value.

Get Cash Back

Maybe you'd like to add a sun deck to your home, or send the kids to college. Or maybe your car needs to be replaced. All of this is possible through a simple cash-out refinance, where the new loan is a little larger than the old one. It's a way to put all that equity to work without the hassle of credit card debt or a third party loan.

Bad Credit Refinancing

You don't always need great credit to get a better mortgage rate. Refinancing even may help you repair a credit history that's been through a few hard times. Cash-out refinancing can help you consolidate credit card debts, as well, at a much better interest rate. With your new, lower monthly bill, it will be easier to keep up with day-to-day expenses. By making these lower mortgage payments on time, you can improve the way you look in the eyes of the credit bureaus.

Home refinancing can do wonders for your financial health. You can save many thousands of dollars in interest, and have monthly payments that are hundreds of dollars lower. At the same time, you get a cure for bad credit and some instant cash on hand to boot. Maybe it's time to take a look at your mortgage, and start flexing your equity.

Published on April 24, 2006