Refinancing your mortgage is a very powerful financial asset when properly timed and executed. Some people refinance at each possible opportunity (no more often than once every six months), while others refinance only as circumstances arise or needs change. Tailoring your mortgage to better suit your life is a practical, generally simple process. Some of the most common reasons involve managing monthly payments, converting equity to cash, and foreclosure negotiation.

ADJUSTING OR FIXING MONTHLY PAYMENTS
You may qualify for a lower interest rate, you may be able to extend the timeframe in which your mortgage has to be repaid (the amortization), you may wish to switch from an adjustable rate mortgage (ARM) to a fixed rate mortgage, or you may decide to include partial premium payments versus making interest-only payments. When deciding on each of these points, your monthly budget is your largest consideration. However, you must also consider how long you plan on owning your home, and whether you plan to pay off your mortgage premium gradually, or sell your home and pay it off in full. Often, higher monthly payments save you money in the long run.

THE CASH-OUT OPTION
You may want to consolidate preexisting debt, you may want to renovate your home in hopes of raising its market value, you may want to make a large purchase (i.e. a vehicle or vacation), you may have a sudden medical or other expense, or you may simply wish to invest your money elsewhere. Whatever your reason, knowing you have the option of converting the equity (monetary value) of your home into cash provides great peace of mind.

AVOIDING FORECLOSURE
Should you fall behind in making your regular monthly payments, most lenders are eager to renegotiate the terms of your mortgage to prevent foreclosure. Sometimes, a lower interest rate can be negotiated to help you get back on track. Missed payments can be added to the total principal owed, and either will be repaid at the end of the mortgage term, or distributed evenly across a set number of months to be included with your regular monthly payments.

DO YOUR HOMEWORK
There are many factors to consider prior to refinancing your mortgage. Just as with any large purchase, your reasons for refinancing and the timing of the transaction, as well as the lender with which you'll proceed, should be thoroughly researched and carefully planned. Many factors can contraindicate the perceived value of refinancing.

DEBT-TO-EQUITY RATIO
The available

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