Lower Your Mortgage Payments When You Refinance
March 17, 2009 by · Leave a Comment
Refinancing a home mortgage is something that people decide to do for various reasons. The decision to refinance a mortgage might be related to current financial troubles or it might be because you wish to borrow money against the equity you have built up in your home in order to make home repairs or to start a new business. However the most common reason that individuals decide to refinance a home loan is in order to obtain a lower monthly payment.
If your monthly payment is causing you some grief and you have decided that refinancing a mortgage loan is in your best interests then read on for two important suggestions to get those lower monthly mortgage payments that you desire.
By extending the terms of your mortgage after refinancing, you can stretch it over a longer period of time. This will lower your monthly payments for sure. Take this example- if you bought a home five years ago that cost $300,000 and it was at a seven percent interest rate, you might decide to refinance the mortgage once your balance is $280,000. This would make your monthly payments $1,200.
But there is a better way to refinance a 2nd mortgage. Here is how- if you took the same home and refinanced at a 6.5% interest rate over a period of 40 years this would lower your monthly payments to $850. You would save yourself $350 a month. The downside to refinancing mortgage this way is that by taking longer to pay off your home you will actually pay more money to the mortgage lender. You must decide what is more important to you, the money you pay in the short-term or the money you pay in the long-term.
In the short-term if you choose to refinance your mortgage you might want to go with an adjustable rate mortgage. If you anticipate selling the house in a few years or expect your income to go up, then look at the option of a hybrid adjustable rate mortgage (ARM). This option for refinancing a home loan means that you will be at a fixed rate for as long a span of time as five years before the point at which the mortgage lender makes the necessary adjustment to the mortgage rate. This refinance mortgage option is attractive to many people because they can enjoy the positive side of having a lower adjustable rate loan and still have a cushion when financially the economy, and their own situation is unsteady.
Refinancing Mortgage Loans – Get the Facts
March 17, 2009 by · Leave a Comment
When it comes to refinancing mortgage loans the more you know the better off you will be. So what is it you need to know when it comes to refinancing a home loan? Read on and find out homeowner!
If doubt creeps into the equation then wait awhile
If you harbor reservations about refinancing your mortgage then don’t do it. Sit on the idea for awhile and wait until you feel more settled about the decision. Refinancing mortgage loans can be a wise move but it can also involve quite an expense.
Don’t let debt collectors bully you into refinancing
If you are in a considerable amount of debt then you may have collectors calling you constantly and putting the idea into your head that refinancing your home mortgage is the right thing for you to do. Collectors want their money as quickly as possible and are not looking out for your best interests. Don’t fall victim to this just because you are in a precarious financial state.
Using collateral to refinance unsecured debts is not smart
Being in debt is upsetting and stressful but being homeless would be infinitely worse! Your home should never be used as collateral for such things as medical debts, personal loans or credit card debts. It is rare that an unsecured creditor will be able to take possession of your home this way. On the other hand, if you refinance your home loan and put up your home as collateral, you can lose it if you default on the payments.
Use different lending companies for refinancing purposes
If you presently have a debt owing that is through a finance company then do not choose to refinance your home loan with the same company. You might want to instead ask the company if they would be willing to reduce your payments on the first loan. However, do not let this company refinance your mortgage for you. If you let them do this then you are likely to suffer the financial consequences in the form of a higher interest rate, new closing costs that are very expensive and hidden penalties. Don’t risk it!
