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Answer: Refinancing your mortgage may provide opportunites like getting extra cash, shortenning the term of your mortgage and helping you build equity faster. When you refinance your original mortgage, you usually swap it for another program or another lending institute, often because the rate of the new mortgage is lower, and the conditions are better. The refinanced mortgage could also save you the cost of private mortgage insurance.

Question: I want to sell my home soon, is it worthy to refinance?

Answer: If it doesn't include any points and other costs to get a lower rate, why not? A refinance from a fixed rate to an adjustable is a pretty good idea if you know you are going to move soon and could use the savings from a lower payments to put toward your new home.

Question: How about other options?

Answer: Other options include switching from one ARM that's been adjusting up for a few years to a new cheaper ARM or to a fixed rate-even if it's more expensive today-to lock in your payments for the remaining term of the loan and ward off further increases from the old ARM. You may consider to change the term also. For some home owners with pleanty of extra cash, a shorter term loan may be better although the monthly payments may be higher, but you'll build equity faster and save hundreds of thousands of dollars over the life of the loan. For fast appreciating homes, you may be encouraged to refinance for a larger mortgage to pull out equity to consolidate your bills, enhance home improvements, buy a new car, pay for your child's education, put money in the bulling stock market, buy another investment property, or meet other financial needs. Provided your new rate is comparatively low enough and you don't use too much equity, your refinanced loan's payment actually could be cheaper each month than the old mortgage. You also have the option here to shorten the term of the new loan and recoup your equity faster.

Question: What are the disadvantages to refinance my mortgage?

Answer: However, with all refinanced mortgages, unless you do shorten the term, you begin again another 30 - year or 15 - year payment cycle. Also, by adding the cost of the new loan to what you've already paid before the refinance, and your bottom line could be more than you can afford over time. On the other hand, if you need to refinance for more than 80 percent of your home's value, the financial benefits dwindled. You might be better off considering non-equity loan options.

Question: How about "automatic refinance mortgages" or "reverse-rate mortgages"?

Answer: Automatic refinance loans usually goes to ARM. A growing number of lenders are offering special mortgages that act like an ARM in reverse. Called "automatic refinance mortgages" or "reverse-rate mortgages," the loans come with a guarantee that your interest rate will drop by as much as 1.5 percentage points below your starting rate-even if market rates are higher at the time. Designed primarily to give less creditworthy borrowers a chance to prove they can make mortgage payments on time and over time, the loan comes with annual interest rate decreases spread out over a couple of years. After a few adjustments down, the rate becomes fixed. You must make all payments on time, maintain a good credit standing and not fall below the income level you listed on your loan application. Here's the point: Just as an ARM begins with a cheaper rate than a fixed rate, reverse-rate mortgages generally begin higher than traditional mortgages. It looks like a gamble that once your loan rate hits bottom, your rate will be competitive with existing rates.

Question: My 30-year loan at the fixed rate of 6.875 percent, but I find some lower rate on the market, what should I do?

Answer: If the difference is more than 0.50%, it worths you to consdier refinancing. Otherwise, save the trouble, since sometimes lender will add extra fee on it.

Good luck!

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