If a homeowner trades in his first mortgage for a new mortgage, then he is said to be going for home refinance. When a person opts for home refinance, his property will be valued and his credit history will be studied once again.  The homeowner on his part can ask for a property report and see whether there are any more security interests or liens attached to the property.  Once all these factors are determined and approved, the homeowner can meet the lender and go ahead for home refinance.

The money you get out of home refinance can be used to repay existing mortgage and helps you save money only if the current interest rates on the principal are lower than what you are already paying.  You can use the home refinance amount to refurnish or repair his home, make additions or expand his property.  You can also use the money for other expenses like medical bills or college fees.  But, be careful when using the money for purposes other than the home because you will have two mortgage amounts to repay.

Simple methodology to be followed in the home refinance process:
    Check credit
    Estimate property value against amount due
    Study interest rates
    Get expert advice

Cleaning up credit history with the credit bureau can help you get quick home refinance at low rates.  If there are discrepancies, check and correct them. Make sure that there are no outstanding amounts that will reflect poorly on your credit history.

Once this is done, you must check the property value against the amount of your mortgage that is still outstanding.  A real estate broker can help a person get an accurate estimate of his propertys worth.  If this value is less that what is still owed, then the home refinance rates will not be attractive.  If the value of the property has appreciated considerably, you can go ahead and check out prevailing interest rates. You do not have to go with the current lender you are doing business with.  Instead, go online and check prevailing interest rates and home refinance terms among other top lending institutions and opt for the one who makes you the best offer.

Getting home refinance can be tricky. Hence try to get help from a well-established local real estate agent who can give you accurate details of the existing real estate market, interest rates and other options like fixed rate refinancing, cash-out refinancing, adjustable rate refinancing and more.  He can help you take  the best decision that will suit your personal budget.  using a specific refinance calculator can help you a lot.

A mortgage calculator meant for refinancing gives a person a good estimate as to whether refinancing is a good option for his needs.  There are many mortgage sites that offer these calculators as free tools.  You will need to enter information like current loan amount, term period, interest rate, refinanced mortgage, refinance costs, prepayment penalties, discount points, closing costs and so on.  The mortgage calculator will indicate to the borrower if the current rate of interest will actually help him save on mortgage payments in the long run.The refinance mortgage calculator uses a break-even formula to give information on the value of refinancing. It will give you details about the difference in existing and future mortgage payments. This difference amount will be the savings you will make if you opt for home refinance. By dividing the closing costs of the new loan by monthly savings you will receive a break-even point, which will be stated in months.  

If a homeowner plans to live long term in his home, the break-even analysis will show him that refinancing is a good option for he can then regain his investment.  Consult your tax attorney too to ensure that your tax deduction amount can be reduced by lowering mortgage interest amounts.  Get expert advice whether it is better to refinance now or wait for a few months.  Analyze the market and make the right decision.