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Over the past few years mortgage refinancing has been extremely popular due mainly to low interest rates and rising property prices. The main reasons for this popularity are:

>To lower monthly mortgage payments. By changing loans from ARMs (Adjustable Rate Mortgages) to a fixed rate mortgage and vice versa, homeowners can take advantage of low interest rates, thereby reducing their monthly payments.

>Release cash which is tied up in your home. Many people have seen the value of their homes rise steadily over the past few years and were therefore keen to release some of this cash by refinancing their mortgages.

>Debt Consolidation. People who have multiple loan payments and find it difficult to manage their finances can choose to consolidate all these loans into one loan by refinancing their mortgage. This is a great way to lower your monthly loan payments and instead of making multiple payments, you make just one monthly payment.

Before leaping into the refinancing world, you must do your homework to see if it the most suitable option for you. Refinancing is an excellent way to reduce your monthly payments and to release equity in your home but some refinancing options are very susceptible to interest rate fluctuations. With the current instability in the subprime loans, many lenders who were very active in the refinance market through their ARM offerings are now tightening the belt as more and more people are defaulting on these.

Lenders are getting more wary about letting people get in over their heads. There are more people now than ever on ARMs and the main problem facing them is the increase in interest rates. If a homeowner got a 3 year ARM at 4% on a $250,000 loan, the monthly payment would be $1,150. Today, that payment would increase to $1,500 a month.

But for many people mortgage refinancing remains an attractive option and a great way of reducing loan payments. If you expect your income to rise and you plan to live in your home for less than 5 years, ARMs still work for buyers.

With all the different types of refinancing loans available today, you should take time to speak with several lenders before you make a decision. The research you do now will equip you with all the facts you need to make the correct decision.

Lindsay has over 5 years experience in providing refinancing consultation and tips to various mortgage loan companies, borrowers and potential home buyers. Read our full guide and more tips at http://www.loansplanet.com