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Guide to Mortgage Refinancing

Why refinance my mortgage?

When you are having trouble meeting your monthly obligations, it may be to your advantage to refinance your mortgage especially if you can get a lower interest rate or change the other terms of the loan. One advantage that many see as home values increase, is that they are able to eliminate PMI on the mortgage. Banks charge private mortgage insurance (PMI) when a borrower has less than a 20 percent down payment. When you get to the point where you have sufficient equity, it is to your advantage to refinance and get the PMI removed. Depending on the amount of your loan, this can save you quite a bit of money each month. In addition, you may find that through refinancing, you can extend the terms of your mortgage out to as long as forty years. Before applying you should check with the lender to see what kind of impact this can have on your monthly payment.

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Can I get money out from a mortgage refinance?

During the process of doing a mortgage refinance, you can get more money than the original loan amount. Many people do this so they can take care of other financial situations like consolidating debts, taking a vacation, investing in the stock market or buying an expensive item. As long as there is sufficient equity in your home and you have the income to support the payment, your bank may not have any problems working with you to get you cash out from the refinance.

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Can I use a second mortgage for debt consolidation?

When your debts get out of control, you may be able to use the equity in your home for consolidation. With a second mortgage you can eliminate all of your debts including credit cards, car loans, student loans, liens, and other bills. This would give you just one monthly payment to worry about and could help you get your finances in order. You may also be able to reduce the amount you are spending on bills each month by getting a loan with a lower interest rate and spreading out the payments over ten, twenty, or thirty years.

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