Most common reasons why people refinance with a FHA mortgage

Sometimes it makes sense to refinance your mortgage and some times it doesn't. While the decision to refinance is one you have to make on your own, below is a list of the most common reasons why people refinance their homes.

1. Get a lower mortgage interest rate
You may be paying too much for your mortgage every month. Even a small drop in your interest rate can save you thousands of dollars. Millions of homeowners are refinancing right now because mortgage rates are the lowest they have ever been. Here is an example:

A mortgage of: $200,000 at 6.25% interest over 30 years...$1231.44 per month

A mortgage of: $200,000 at 5.00% interest over 30 years...$1073.65 per month

In this case, with a little more that a 1% reduction to interest rate yields over $150 per month in savings. The Government designed FHA loans to save you money and make owning a home more affordable. If you have an interest rate that is 6.00% or higher you may want to consider refinancing to a lower rate. Click here to see you you qualify for a FHA Refinance

2. Consolidate debt
Millions of home owners are now using the equity in their home to their advantage. A smart way to reduce your debt is to consolidate it into your mortgage at a low interest rate. The money you borrow in the form of unsecured debt, such as credit cards, are notorious for having high interest rates. What are the rates on your credit cards...? - 9% - 12% - 22%??? Many home owners are taking their high rate credit card debt and consolidating it into their mortgage for one simple reason, the interest rate on their mortgage is MUCH lower than the interest rate on their credit cards - less interest means less money you have to pay - SAVINGS!

Here is an example of how you can save money by consolidating:
Peggy Olsen has a mortgage of $200,000 at 6.25% and pays $1231.44 per month. Peggy also has $15,000 in credit card debt with a minimum monthly payment of $472 per month [12.00% interest rate] - So between her mortgage and her monthly credit card debt, she pays $1,703 per month....By refinancing her mortgage, Peggy can consolidate her high interest credit card debt into her mortgage at one low fixed rate of 5.00%. Now, Peggy has NO monthly credit card debt and her mortgage is $215,000 at 5.00% she now pays only $1,154.17 for her mortgage which includes her debt and has saved $549 perm month -GOOD JOB PEGGY.

3. Get out of an Adjustable Rate Mortgage (ARM)
Over the past few years, many home owners (maybe even yourself) took an adjustable rate mortgage for one reason or another. Some applied for an ARM because it offered a low fixed introductory rate with out realizing that the rate would change a few years down the road. Others just failed review their loan paperwork carefully. Whatever the reason, millions of homeowners have adjustable rate mortgages (ARMs) and may have experienced hardships as a result. Rates are low right now which means that MOST adjustable rate mortgages are yielding lower monthly payments, but what happens when interest rates go up!? - What happens is the adjustable rate mortgages that were once around 4 or 5% will go up as well. The solution - refinance to a fixed rate FHA home loan while rates are still low. Home owners who have a fixed rate feel secure knowing they have a mortgage payment they are comfortable with that will NEVER change.

4. Getting Cash from your Home
The equity in your home is money, and your money at that! The Equity in your home can act as savings account that you can access through a refinance. Home owners usually refinance to take out equity when money is needed to do a home improvement, pay for college tuition, pay bills, start a business etc. Click here to see how much your mortgage payment will be if you take cash out from your home.