Why You Would Refinance Your Home Loan

People hear about mortgage refinancing all the time but some people wonder why they would need to refinance their home loan at all. There can be a great many reasons why you would do this and as long as you are making sound financial decisions with the terms of your loan then there is no such thing as a bad reason to refinance your home loan.

The most common reason causing some people to choose to refinance is that their existing interest rate needs to be changed. People with variable interest rates may want to get into a mortgage with a fixed rate and people with a higher fixed rate may want to lower their rate and lower their monthly payment.

People will also refinance their home loan to get extra spending money for a large debt they either have incurred or will incur. Since a home equity loan is a variable interest rate mortgage product many people prefer to refinance with a fixed mortgage rate on a standard loan than take a chance with variable rates on a home equity loan.

In some cases people refinance to remove someone from their mortgage that they do not want on the paperwork anymore. For example, if a couple divorces and the husband gets the home then the wife may agree to sign a quit claim deed to give him full rights to the property. However the wife is still on the loan until the husband refinances and if the husband defaults on the loan then the wife will be liable. So in a divorce it is usually in both party's best interest to get the mortgage refinanced in the person's name who will be keeping the home unless the other party is ordered to make the mortgage payments in which case a separate agreement will be needed.

You can learn more about your legal rights for home loans, and also get much more information, articles and resources regarding home loans at Home Loans And Mortgages