When you refinance your residential mortgage loan you can enjoy a variety of money saving benefits. This is because there are several alternatives to your current mortgage. Refinancing your home loan gives you a chance to review the terms of your current mortgage and choose terms that can help you save money in the long run — often thousands of dollars.

Saving on interest

If you refinance your residential mortgage loan to a lower rate, you can save thousands of dollars on interest alone. If you have a high rate, you can refinance to a lower rate. If you have an adjustable rate mortgage (ARM), you can refinance to a fixed rate. Changing your terms so that you pay less in interest is one of the most basic ways that people can save money on their home loans. Additionally, in most cases, the interest from your residential mortgage loan refinance is tax-deductible, meaning that you save money when it comes to paying Uncle Sam as well.

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There are so many types of mortgage programs available to home buyers that it can get difficult to keep them all separate. One of the latest types of programs that many people are taking advantage of is the Interest Only Mortgage option. An interest only mortgage is just as it sounds, you are only required to pay for the interest that is constantly accruing on your loan. As opposed to a typical mortgage you make both interest and principal payments.

The lower payment that you will see when only needing to pay the interest on your loan is great, but there are a few tradeoffs. First, as was previously stated, you are only making interest payments. This means that your monthly payments will not build actual home equity.

People who use interest only mortgage options typically have the option to make extra payments each month which will go towards their principal balance, however, most find that they never do. If you are thinking of taking on an interest only mortgage loan, mandate that you make extra payments every month or two. If you want to really build equity in your home, this is a must.

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Across the country, thousands of people are losing their homes because payments on their subprime loans have increased to the point that they can’t afford the loans.

But in Massachusetts, where foreclosure filings have nearly doubled during the past year, the governor is asking lenders to give homeowners more time.

The move follows a recent protest at Gov. Deval Patrick’s office by homeowners who said their loan officers and mortgage brokers lied to them about the interest rates they would pay on their subprime loans.

“I have a 4-year-old son. I work hard. I’m a single parent. I have a good job. I’m doing what I’m supposed to do. I cry every night because I don’t know what’s going to happen the next day,” said protester Raymona Bowen, who stood to lose her home in a matter of days.

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