| Even though rates are on the rise, that | | | | to consolidate into one loan that would |
| doesn't mean you shouldn't refinance. | | | | be easier to keep track of. Either way, |
| Practically everyone has refinanced or | | | | refinancing into a fixed-rate isn't a |
| thought about it at one point in time. | | | | bad idea. And one payment is easier to |
| We've seen the dozens of commercials | | | | make on time each month than two. |
| that urge us to do it. With rates at | | | | Those out there with adjustable-rate |
| record lows over the past few years, | | | | mortgages are starting to get a little |
| refinancing has helped many borrowers | | | | nervous. Interest rates have been rising |
| lower their monthly payments. | | | | pretty fast. The gap between the rate of |
| But rates are now on the rise. | | | | a adjustable mortgage and a fixed |
| Refinancing applications have fallen | | | | mortgage has narrowed so much that you |
| slightly. Most people don't think you | | | | really don't save much by taking the |
| should refinance when rates are going | | | | adjustable mortgage. Many are looking to |
| up. However, many refinancings are | | | | avoid rising interest rates by financing |
| "cash-out" refinancing. That means that | | | | to fixed-rate mortgages. |
| equity is handed over to the homeowner | | | | Refinancing can be a good thing. You can |
| in return for a larger mortgage. Many | | | | get a fixed rate to counter the rising |
| people need that cash. | | | | interest rates. You can use cash from a |
| Some people are refinancing their homes | | | | refinancing to consolidate your debt. |
| for a "cash-out" because they have a | | | | You can improve your home. But you |
| significant home-equity line of credit | | | | should be careful about taking too much |
| balance. This line of credit has an | | | | equity out of your home. |
| adjustable-interest rate, which is going | | | | Many advisors warn consumers not to use |
| up on them. They refinance it in with | | | | their homes as personal piggy banks. If |
| their first mortgage at a fixed rate. | | | | home prices decline, you could owe more |
| They aren't eliminating the debt, just | | | | than your house would sell for. In a |
| fixing the interest rate and monthly | | | | cooling, or slowing, real estate market, |
| payment. If you don't need the revolving | | | | you do not want to be maxed out on the |
| line of credit, you should probably take | | | | equity in your home. If something |
| advantage of the fixed rate. | | | | happened and you had to sell, you want |
| There are many homeowners that piggyback | | | | to walk away from the closing table with |
| their mortgages when they are buying. | | | | money, not have to go to it with a |
| They end up with one mortgage for 80% of | | | | check. Paying to sell your home isn't |
| the value of the home and a second | | | | how you want to do it. |
| mortgage for 10%. They put the remaining | | | | Fixed-rate mortgages are always a good |
| 10% down on the home. Since the first | | | | and solid financial choice. Anytime you |
| mortgage is only for 80% of the purchase | | | | are looking to refinance, your best |
| price, they avoid having to pay PMI. | | | | option is to go with the shortest-term, |
| Many piggybackers have a line of credit | | | | fixed-rate mortgage you can afford. |
| as the second loan. Others simply want | | | | |