The concept of a free refinance of mortgage is very popular. In simple terms, it means paying off an old loan by taking a new loan. There are several reasons why people go for refinancing. Homeowners go for refinance to get a lower rate of interest. It also gives them an opportunity to convert the adjustable-rate mortgage to fixed rate mortgage or vice versa. Homeowners also opt for free refinance of mortgage so that they can consolidate their debt. Affording homes with free refinance of mortgages is not a difficult process today.
A free refinance of mortgage can cost anything from 3% to 6% of the principal amount of loan taken and also taking out the mortgage will require appraisal. It also requires other things like title fees and application search. The homeowner must decide beforehand whether the refinancing of mortgage would prove beneficial or no. The most common reason for a homeowner to want a free refinance of mortgage is to get a lower rate of interest on the loan that he was taken to cover the older loan. Many money lenders today allow refinancing the mortgage if the savings are only 1%.
Reducing the rate of interest has many benefits for the homeowner. Firstly, it helps you to save a lot of money and increase the rate at which you build the equity in your home. Free refinance of mortgage also decreases your monthly payment. When the interest rates go down, the homeowners get an opportunity of a free refinance of mortgage without making many changes in the monthly payment schedule and of course with a shorter loan repayment tenure.
Converting adjustable rate and fixed rate for a free refinance of mortgage?
The adjustable rate mortgage or the ARM offers a low rate of interest while the fixed rate mortgage has a higher rate of interest to offer. Similarly converting them from fixed rate to adjustable rate is also a big financial issue. It is not that simple. It becomes more difficult particularly when the rates of interest are falling. Adjustable rate is a much better option for those who might not stay in one domicile for long. A free refinance of mortgage is a profitable option only if it can help reduce the amount of your mortgage payment and bring down the period of the loan. Free refinance of mortgage can put an end to all your financial woes.