The current drop in mortgage interest rates has attracted many homeowners to seek refinancing. Refinancing is not uncommon; the average American homeowner refinances their mortgage every four years. One of the primary reasons that borrowers refinance their existing loans is because refinancing could result in huge savings over the life of their loan by obtaining a lower interest rate. If a fixed rate was obtained when the home was first purchased, and interest rates have dropped, refinancing could significantly lower payments. Homeowners also refinance in order to change the type loan from fixed to adjustable or go from an adjustable to a fixed. Adjustable rate mortgages usually start out with a lower interest rate, but the fluctuations in payment amounts can sometimes be stressful.

This is a great time to mortgage rates refinance because interest rates are at an all time low and the new low rates have made prompted some borrowers to consider refinancing in order to switch adjustable rate mortgage or from an adjustable to a fixed interest loan. Mortgages with adjustable rates have limitations on how much payments can increase. Those who are not satisfied with the caps on their loan may also consider refinancing to another ARM that is more favorable features.

Those home owners who are fortunate enough to have equity in their homes can turn their equity into cash. Some homeowners take out new mortgages with a a new larger principal, in order to cash out their equity. This is often an option borrowers use if they have a major expense. There are advantages to taking out a loan that is secured by your home. These loans are attractive because of the decline in current mortgage interest rates.

When the Federal Reserve reduced interest rates, banks responded by cutting their rates. The goal of rate reduction is to help the economy recover and grow. One of the benefits of the lower rates is that it currently costs less to borrow money. Mortgage rates refinance are at an all time low.

It is nearly impossible to not see advertisements about the advantages of refinancing an existing mortgage under the lowered interest rates. Current mortgage interest rates are as low as 3.75 % for some loans. At rates this low, it is hard for qualified homeowners not to refinance to take advantage of the savings. What’s great about refinancing an existing mortgage is that it can provide borrowers with extra cash that can be used for debt consolidation or children’s college education. It is important to stay on top of financial trends in order to lock in the new rate and get the best mortgage possible.