With the unsettling conditions in the home loan market today, homeowners are wisely looking at their options for refinancing mortgages. Fluctuating interest rates, slowing house prices and the sub-prime mortgages crisis have all helped to send the home buyers market into a spin. Making the decision to switch lenders or re-arrange mortgages could be an excellent move, if its for the right reasons.
Refinancing mortgages to release equity.
One of the main reasons for refinancing mortgages is to free up the equity already built up in the property. Many homeowners are tempted to go down this route to clear other debts, pay for new cars or vacations, or for school fees for example. While refinancing mortgages can help, borrowers need to be aware that the overall mortgage term would be extended and payments will go up to meet the higher amount of the loan. On the other hand, releasing equity for investments, new businesses and other ventures can be a lucrative move if the expected return is higher than the interest rate on the mortgage.
Refinancing mortgages for a lower interest rate.
This is generally the best money saving reason for refinancing....
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