Reasons to Refinance

While a home loan refinance will lower your rate, reduce your monthly payment and save you money, those aren't the only reasons people take the plunge. You might want to consider looking into a home loan refinance for any one of the following reasons:

You've got payment problems. If your monthly payment is pushing your budget to its limit, a home loan refinance will almost always lower it. Even if you refinance at the same interest rate, your balance would be stretched out over the life of the new loan, bring the monthly charge down. On the flip side, if you can easily afford a higher payment, you might want to consider refinancing a 30-year mortgage with a 15-year loan, which would build equity faster and greatly reduce the total amount of interest you'll pay.

You're tired of ARM wrestling. If payments on your ARM, or Adjustable Rate Mortgage, have "adjusted" too high in the wrong direction, you might want to level the paying field by refinancing with a fixed-rate loan. Even if the ARM's rate haven't gotten out of control, some homeowners feel the peace of mind they get by locking in a rate is well worth the trouble.

You're in a better place. Bad credit histories equal high interest rates. So if your credit score has dramatically improved since you applied for your mortgage, the new, credit-conscious you will probably get a better deal with a home loan refinance. And if more money has started coming in since you obtained your loan, swapping a 30-year mortgage with a 15-year loan might raise monthly payments but save you a boatload of cash in the end.

You're suffering PMI pains. If your down payment was less than 20 percent of your home's value, you've been saddled with PMI, or Private Mortgage Insurance, charges ever since. Although many people blindly pump money into the PMI purse long after they've cleared the 20 percent hurdle, the fact of the matter is it's not necessary. If you've paid down 20 percent of your loan, or if your house has increased in value, ask your lender to drop the PMI. If the request is met with resistance, it might be time to start looking at home loan refinance options.

You're experiencing debt regret. If the combination of your personal loans, credit accounts and mortgage has become too much of a monthly burden, you might want to consider a home loan refinance to consolidate your debt.

You've got the big bill blues. If you're confronted by a major expense, such as college tuition or a major home remodeling project, many times it's better to liquidate your home's equity through a home loan refinance instead of taking on an additional monthly payment.