Refinancing is a great way to adjust your monthly mortgage payment to fit your current goals and needs. You may want either a smaller payment or shorter re-payment period- especially if your income or plans have changed.

A smaller payment will increase your available funds each month, while a larger payment will speed up your mortgage payoff. Either way, refinancing can help you meet a financial goal.

Reduce Your Monthly Payment

• Refinance when interest rates drop. A drop in interest rates from your current level may be enough to make refinancing financially attractive - as long as you stay in your home long enough to recoup the closing costs.
  
• Increase your loan term. You can usually lower your payment by increasing the term of your mortgage. Remember, this means that you will be paying less principal each month and more interest over the life of the loan.
  
• Switch from a fixed-rate to an adjustable-rate loan. If you plan to stay in your home for only a few years, you can frequently lower your payment by taking an adjustable-rate loan with a shorter-term.
  
• Switch from an adjustable-rate loan to a fixed-rate loan. Take advantage of lower interest rates and enjoy the security of fixed monthly payments.
  
• Eliminate private mortgage insurance (PMI). If you've built up enough equity in your home, you can frequently lower your payment by refinancing and eliminating the monthly premium required for private mortgage insurance. (You may also be able to do this without refinancing. Contact your lender for details.)
  

Pay Off Your Loan Sooner

• Decrease your loan term. You can potentially lower the overall cost of your loan over time by reducing the term of your mortgage or home equity loan. This forces you to pay off more principal each month, thereby reducing the interest paid over the life of the loan.
  
• Make bi-weekly payments. In effect, you are paying the amount of an extra payment every year. That extra payment goes entirely toward reducing your principal. Check with your mortgage provider to see if a bi-weekly payment option is available on your loan type.