Shopping for Refinancing: Consider More than Mortgage Loan Rates

By Karen Lawson Columnist

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You're expecting your adjustable rate mortgage to go up this year, and are investigating the possibility of refinancing. You'd like to eliminate increasing payments associated with an adjustable rate mortgage. Depending on how long you plan to keep your home, what you expect your financial situation to be in the near and long term, and what you think financial markets are going to do, you may want to refinance to another adjustable rate mortgage with a low initial rate. Here's why.

  • » Debt Consolidation: If you've accumulated thousands of dollars in credit card debt, you may be able to refinance and cash out equity sufficient to pay off higher interest rate debt. Remember, the lower the initial interest rate, the lower your mortgage payment will be. Qualifying for the additional cash you'll need may be easier if you take out an adjustable mortgage with a low initial rate for the first few years.
  • » Short on Cash? Refinancing to a Lower Interest Rate Can Help: Maybe you're in grad school, or are starting a new career. You know you'll be making more money in a few years, and will want to buy a larger home. A new mortgage with an initially low interest rate can help ease financial stress by providing lower payments until you're ready to sell your home.
  • » Unexpected Expenses: If you've incurred medical or other catastrophic expenses, accessing your home equity through refinancing may provide a way of repaying all or part of your unexpected expenses.
It's important to consider more than interest rates before refinancing, as knowing "the big picture" of your finances can help you choose a mortgage that can help you meet additional goals.

About the Author
Karen Lawson is a freelance writer with extensive experience in mortgage banking. She holds BA and MA degrees in English from the University of Nevada, Reno.

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