Sunday, June 14, 2009

Should I Refinance ?

There are a lot of reasons to refinance your jumbo mortgage. While there may be some circumstances where refinancing would not be a wise decision, there are a many benefits which can be gained from refinancing out of an unfavorable situation. Some the benefits could include lowering your monthly payment, consolidating your debt or to utilizing the existing equity in their home. Homeowners who are thinking about refinancing ought to consider each of these options as it relates to their current financial situation to determine whether or not refinancing their jumbo mortgage makes sense.

Lower Your Monthly Payments

For almost every homeowner the prospect of a lower monthly payment is a very strong reason to refinance. Many homeowners find themselves living paycheck to paycheck and the thought of finding an opportunity to bolster their savings and have some investment capital could be a dream come true. Most homeowners that negotiate lower interest rates when they re-finance their jumbo loan will most likely see a lower monthly mortgage payments resulting from the refinance.

Every month homeowners make a mortgage payment. These payments usually are used to pay the interest and a portion of the principle on the mortgage. Homeowners who can refinance their jumbo loan to a lower interest rate can see a decrease in the total they're paying in both interest and principle. This is the result of a better interest rate in addition to a smaller balance. When a jumbo mortgage is re-financed, a second loan is secured to pay off the first jumbo. If the existing jumbo was already a couple of years old, it's probably safe to say the homeowner built up some equity in addition to paying off some of the previous balance. This allows the homeowner to take out a smaller loan when they re-finance their jumbo because they're paying back a smaller debt than when they purchased the property.

Consolidating Your Debt

Some homeowners are looking to refinancing their jumbo mortgage in order to consolidate high interest debt. This is particularly true for homeowners who have credit card debts. Debt consolidation loans allow the homeowner to use their existing equity in their home as collateral in order to get a low interest loan which is big enough to pay off their existing jumbo loan in addition to other debts like high interest credit card debt, car loans, s or any other debts the homeowner could have.

When considering refinancing a jumbo mortgage for debt consolidation purposes, realize you may not see an overall increase in savings. Homeowners that are consolidate their debts are more times than not struggling with making their monthly payments and are looking for an option which makes managing their monthly payments affordable.

In addition, debt consolidation can also make paying you bills easier as you only need to make one monthly payment as opposed to several. Even if the there is no worry about meeting your monthly obligations just the simple act of writing all those checks month in and month out and the time and effort required to do the same can be overwhelming for some people. For this reason, a lot of homeowners will refinance their jumbo mortgage just to simplify their life.

Using the Existing Equity in Your Home

Another valid purpose for refinancing you jumbo mortgage is to gain access to you equity in the home. Homeowners that have a lot of equity in their property might find they're able to take some cash out of the new jumbo loan for other purposes. This might include doing some home improvements, taking that vacation you always dreamed about, starting a business and being your own boss, or continuing your education. There is no limit on how or what you could use the equity in your home for home when you refinance your jumbo mortgage it could be used for any purpose you can imagine.

Regardless of the reason for refinancing your jumbo mortgage, now is the time to act. The lending environment is very unstable today and investigating your options when it comes to refinancing your jumbo is probably a wise decision.

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