why do homeowners want to refinance?

Answer 1

Usually it is because the percentage rate has gone down and they want to save money. Some times it is because they have an adjustable rate mortgage and there mortgage rate is about to jump up and increase their payments significantly. They refinance to get a lower and fixed rate.

I knew one guy who did it because he got mad at his mortgage company.

Many of the answers above are confusing an equity loan with a refinance of an existing mortgage. A refi is done for the reasons I said above. It is a new mortgage, possibly a different type mortgage, at a new rate that replaces an existing mortgage.

An equity loan is a loan of the value which is the difference between what you owe on your house and what it is actually worth. This loan is at a completely different interest rate for a different length of time. It is a completely different loan from your mortgage. The only way that a mortgage is related to an equity loan is that the same house is used as collateral.

An equity loan is best used for a long term need like home repair, home improvement, college, etc.

Answer 2

Unlike your first answer that's not always true, In my case I inherited a house and property worth alot of money but had to take a mortgage to pay the back taxes and other expernses. I had no idea about mortgages and took a 40,000 dollar one and my payments in 4 years have went from 450 to 1000, because it is a adjustable rate one. There is nothing they would like more than to take this property from me, and I am going to refinance for a fixed rate , at dirt cheap prices because in Michigan so many people have lost there houses a fixed rate mortgage will be cheaper than what I started off with even if I borrow another 10,000 to put new roofs on the house and garage. I am going to star you though because alot of people refiance for so many differant reasons that are good and stupid.

Answer 3

Homeowners get to write of the interest they pay off on their Mortgage loans, unlike credit cards or other high interest purchases. So, what many are doing is they are paying off high interest credit cards, autos, everything, and consolidating it into one (or maybe a second) mortgage, which should be considerably lower and again, able to be written off on your taxes. The problem is that many homeowners are not realizing that their 5 yr 14% auto loan was better than the newly refinanced 30 yr, 7% home loan with the car loan thrown in and paid off. Interest kills.

Answer 4

To get out of the basket of snakes call Adjustable Rate.

Buyer's really paid no attention to the mess they were getting into when they agreed to these "instruments of financial destruction"

The banks dreamed up the adjustable rate mortgage to shift the risk of higher interest rates from the banks to the borrower.

Then they sold it to the general public with teaser rates to get them sucked in.

The unsophisticated buyer, NOT working with a saavy Realtor fell for it Hook, line and sinker.

Now they have to get out of these lousy loan programs and get into what they should have gotten in the first place A FIXED RATE LOAN!

Hope this helps.

Terry S.

http://www.Welcome2Arizona.com

Answer 5

because we are in a financial bind and need the money to consolidate some bills, and it's a shame we've got all this equity and can't tap into it because so many people don't pay their mortgages and have screwed the system over!!!

although, i'm sure i'll get my car and credit cards paid off eventually, and then i'll be so glad i didn't get a 30 year mortgage to pay it off (cuz i'll probably pay the car and cards off way sooner than that...)

Answer 6

either to take money out (borrow more) or get a lower interest rate (pay less).

Answer 7

to get extra money

Answer 8

spending money, its not wise though.