Refinancing can have other financial benefits besides lowering rates. Locking in rates can protect you from higher rates, saving you money on future interest costs. You can also change your ARM for better caps to prevent huge monthly increases. Consolidating your bills with your equity saves on credit card rates while providing a tax advantage.
Protection From Future Rate Hikes
An adjustable rate mortgage (ARM) provides the lowest rates for home buyers, but these rates can increase. Monthly payments can jump a couple of hundred dollars a month depending on market rates and loan caps.
For those planning to stay in their home for more than seven years, it is a good idea to refinance to a fixed-rate mortgage if rates look likely to rise. Fixed-rate mortgages offer security from future payment hikes, but with slightly higher rates than ARMs.
Trading In For Better Caps
Many ARMs offer initial low set rates that can change after a couple of years. Jumps in payments can be surprising, especially if you have less than favorable caps. Caps set limits on how much and how often your payments can increase.
Refinancing your ARM can help you negotiate lower caps. You can also find an ARM with set rates for several years, just like with your original mortgage.
Helping To Pay Off Your Loan
Early payment of your home loan saves on interest costs. For those you need a structured approach to make larger payments, refinancing for a shorter term may be the answer.
For instance, exchanging your 30 year mortgage for a 15 year mortgage can reduce your interest costs by almost half, even at the same rate. Even with the origination costs, early payment will still save you money.
Taking The Tax Advantage
Mortgage interest is tax deductible, unlike interest on other bills. Cashing out part of your equity to pay off bills can give you a financial edge to get ahead. Be sure to make refinancing part of your larger financial goals to enjoy the full benefits.
Investigating Lenders
Investigate lenders before you sign a contract to be sure you are getting the best financial offers. Ask about their APR to get a true understanding of the loan costs. Many financial companies post this information online, or you can request near instant quotes.
Wednesday, March 31, 2010
Tuesday, March 30, 2010
Refinancing A Fixed Rate Mortgage With A Home Mortgage Loan
Refinancing a fixed rate mortgage is usually only suggested when interest rates fall, but you can also save money by changing your loan terms. You can also pull out part of your equity to pay bills or renovate.
Lower Interest Rates
In general when interest rates are at least 1% lower than your current mortgage rate, it pays to refinance. But you need to consider other factors, such as the length of your mortgage, loan costs, and how long you plan to stay in your home.
An adjustable rate mortgage (ARM) should also be considered if you plan to move soon. With rates lower than a fixed, you will see lower monthly payments. But you have the risk that your rates and payments will increase over time.
To help decide if refinancing makes sense for you, calculate the difference in interest payments over the course of your loan. Online mortgage calculators can help you find both total interest costs and monthly payments.
Better Loan Terms
Besides lower interest rates, you can save money by converting to a better loan term. A shorter loan, such as a 15 year term, can save you thousands on interest payments, even if you don’t have a lower interest rate. However, your monthly payments will be 10% to 15% higher.
You can also reduce your monthly payments by refinancing for a longer term. You trade lower payments for higher interest costs.
Access Your Equity
Whether you want to pay off credit cards or pay for your child’s education, you can pull out your equity by refinancing. One of the advantages of using your equity is that your interest is tax deductible.
However, if you just want to tap into your equity, a better option is a home equity loan. You can pull out your equity, write off your interest on your taxes, and avoid loan fees.
Online Lenders
Online financing companies allow you to research terms and fees from your home. You can receive quotes within minutes online, so you can compare finance packages. You can also apply online and qualify for discounts on closing cost with some lenders.
Lower Interest Rates
In general when interest rates are at least 1% lower than your current mortgage rate, it pays to refinance. But you need to consider other factors, such as the length of your mortgage, loan costs, and how long you plan to stay in your home.
An adjustable rate mortgage (ARM) should also be considered if you plan to move soon. With rates lower than a fixed, you will see lower monthly payments. But you have the risk that your rates and payments will increase over time.
To help decide if refinancing makes sense for you, calculate the difference in interest payments over the course of your loan. Online mortgage calculators can help you find both total interest costs and monthly payments.
Better Loan Terms
Besides lower interest rates, you can save money by converting to a better loan term. A shorter loan, such as a 15 year term, can save you thousands on interest payments, even if you don’t have a lower interest rate. However, your monthly payments will be 10% to 15% higher.
You can also reduce your monthly payments by refinancing for a longer term. You trade lower payments for higher interest costs.
Access Your Equity
Whether you want to pay off credit cards or pay for your child’s education, you can pull out your equity by refinancing. One of the advantages of using your equity is that your interest is tax deductible.
However, if you just want to tap into your equity, a better option is a home equity loan. You can pull out your equity, write off your interest on your taxes, and avoid loan fees.
Online Lenders
Online financing companies allow you to research terms and fees from your home. You can receive quotes within minutes online, so you can compare finance packages. You can also apply online and qualify for discounts on closing cost with some lenders.
Monday, March 29, 2010
What Are Your Options For Finding A Home Mortgage Refinance Lender?
If you have ever considered refinancing your home mortgage, now is the time. You likely realize that mortgage interest rates have reached a record low. Hence, taking action to obtain a lower rate or convert to a fixed rate is wise. After deciding to refinance a mortgage, your next big decision involves selecting a good lender. Because various lenders offer refinancing, there are several options available to you.
Request Quotes from Your Current Mortgage Lender
Before refinancing, you should fully understand the process. Refinancing involves more than simply acquiring a better mortgage rate. If you make the decision to refinance, you will create an entirely new mortgage. With this said, homeowners should anticipate paying closing costs and other mortgage fees.
If you refinance with your current mortgage lender, it is possible to have some fees waived. For example, the lender may not charge a fee for title search, appraisal, application, etc. In some instances, the lender may offer to pay these fees as a part of the negotiation. The aim is to keep you as a customer.
Contact Individual Mortgage Companies
If you have good credit, you may get approved for a low rate refi with little effort. Nonetheless, it is vital to compare quotes and offers from more than one lender. Comparing lenders is very necessary if you have bad credit. Some mortgage lenders do not specialize in bad credit loans. Hence, a person with poor credit will pay much higher fees.
To avoid this problem, research lenders that offer bad credit mortgages, and request quotes from these lenders. By comparing rates, fees, and terms, you can quickly identify a bad refi loan. Remember, the primary objective of a refi loan is to secure a better home loan. Avoid refinance loans that will not save you money.
Find a Lender with a Mortgage Broker
The easiest and ideal way to locate a good lender is through a mortgage broker. Regardless of your income, credit, etc, a broker has the ability to locate the best loan. In fact, brokers present their clients with several loan offers. Upon receiving your information, the broker will match you with potential loan programs. Before making a decision, you should carefully review each offer. Thus, you are aware of estimated refinance rate, monthly payments, terms, closing fees, etc.
Request Quotes from Your Current Mortgage Lender
Before refinancing, you should fully understand the process. Refinancing involves more than simply acquiring a better mortgage rate. If you make the decision to refinance, you will create an entirely new mortgage. With this said, homeowners should anticipate paying closing costs and other mortgage fees.
If you refinance with your current mortgage lender, it is possible to have some fees waived. For example, the lender may not charge a fee for title search, appraisal, application, etc. In some instances, the lender may offer to pay these fees as a part of the negotiation. The aim is to keep you as a customer.
Contact Individual Mortgage Companies
If you have good credit, you may get approved for a low rate refi with little effort. Nonetheless, it is vital to compare quotes and offers from more than one lender. Comparing lenders is very necessary if you have bad credit. Some mortgage lenders do not specialize in bad credit loans. Hence, a person with poor credit will pay much higher fees.
To avoid this problem, research lenders that offer bad credit mortgages, and request quotes from these lenders. By comparing rates, fees, and terms, you can quickly identify a bad refi loan. Remember, the primary objective of a refi loan is to secure a better home loan. Avoid refinance loans that will not save you money.
Find a Lender with a Mortgage Broker
The easiest and ideal way to locate a good lender is through a mortgage broker. Regardless of your income, credit, etc, a broker has the ability to locate the best loan. In fact, brokers present their clients with several loan offers. Upon receiving your information, the broker will match you with potential loan programs. Before making a decision, you should carefully review each offer. Thus, you are aware of estimated refinance rate, monthly payments, terms, closing fees, etc.
Sunday, March 28, 2010
When To Go For a Home Mortgage Refinance Loan
A Home Mortgage Refinance Loan is taken up on the same property on which the first loan was taken. Home Mortgage Refinance is a very effective way to debt related problems.
Borrowers take refinance for different purpose. Some borrowers secure a refinance loan to pay off the previous debts on which the first loan was taken. Quite a few borrowers would take up a mortgage refinance to change or lower the rate of interest and change the tenure of the loan as well. Some borrowers take up a refinance to pay off other credits or unpaid bills.
Reasons to Secure A Home Mortgage Refinance Loan
The most important reason for taking up a second loan is to avail a suitable lower interest rate. A lower interest rate than the previous one will always help the borrower to thousands while repaying the interest. But it is advisable to consult a good lender or study the loan market thoroughly to get the clear picture. This will help the home owner to choose the right package with a considerably low rate of interest.
Another reason to refinance is to Cash out the previous loan. This can also be termed as Cash out Refinance. Borrowers may take up a refinance on their property to draw cash from their home equity. Home owners can apply for a big amount of loan securing which will pay off his first loan as well as have extra cash to use for different purpose. Cash out refinance is obtained to repair homes or pay off bad credits or even educational expenses.
A Home Mortgage Refinance Loan is taken up in order to shorten the period of the loan. A shorter tenure will help to save a lot of money for the homeowner. Though a shortening of the tenure of the refinance will increase the monthly budget of the borrower significantly but a refinance teamed with a lower interest rate will definitely help to save a few thousands for the borrower. This will in turn complete the repayment much earlier than usual thus unburdening the borrower from heavy expenses of repayments.
Taking the Right Step Towards Securing A Mortgage Refinance
Since the refinance market is growing larger by day, it is important to choose the right lender. Finding the right lender is not a difficult task nowadays. The market has gone online and an in depth research about the refinance market can be done sitting at home. Innumerable sites of the lending companies and the banks offer great refinance schemes designed for different borrowers. An in depth research will help the borrower to choose the right package as well as the right lender. Bargaining is a very common practice in the refinance market. A good bargain for a Home Mortgage Refinance Loan not only pays off previous repayments but also gives extra funds to use for other purposes. A suitably designed refinance is the best possible way to get the repay the loans in time which will in turn save money as well.
A Brief Review
When it becomes difficult for the home owner to repay the first loan the best option for him is surely a Home Mortgage Refinance. It helps the borrower to repay the loan on time, lower the interest rates, and shorten the loan tenure as well. It may be called as the best solution for home owners.
Borrowers take refinance for different purpose. Some borrowers secure a refinance loan to pay off the previous debts on which the first loan was taken. Quite a few borrowers would take up a mortgage refinance to change or lower the rate of interest and change the tenure of the loan as well. Some borrowers take up a refinance to pay off other credits or unpaid bills.
Reasons to Secure A Home Mortgage Refinance Loan
The most important reason for taking up a second loan is to avail a suitable lower interest rate. A lower interest rate than the previous one will always help the borrower to thousands while repaying the interest. But it is advisable to consult a good lender or study the loan market thoroughly to get the clear picture. This will help the home owner to choose the right package with a considerably low rate of interest.
Another reason to refinance is to Cash out the previous loan. This can also be termed as Cash out Refinance. Borrowers may take up a refinance on their property to draw cash from their home equity. Home owners can apply for a big amount of loan securing which will pay off his first loan as well as have extra cash to use for different purpose. Cash out refinance is obtained to repair homes or pay off bad credits or even educational expenses.
A Home Mortgage Refinance Loan is taken up in order to shorten the period of the loan. A shorter tenure will help to save a lot of money for the homeowner. Though a shortening of the tenure of the refinance will increase the monthly budget of the borrower significantly but a refinance teamed with a lower interest rate will definitely help to save a few thousands for the borrower. This will in turn complete the repayment much earlier than usual thus unburdening the borrower from heavy expenses of repayments.
Taking the Right Step Towards Securing A Mortgage Refinance
Since the refinance market is growing larger by day, it is important to choose the right lender. Finding the right lender is not a difficult task nowadays. The market has gone online and an in depth research about the refinance market can be done sitting at home. Innumerable sites of the lending companies and the banks offer great refinance schemes designed for different borrowers. An in depth research will help the borrower to choose the right package as well as the right lender. Bargaining is a very common practice in the refinance market. A good bargain for a Home Mortgage Refinance Loan not only pays off previous repayments but also gives extra funds to use for other purposes. A suitably designed refinance is the best possible way to get the repay the loans in time which will in turn save money as well.
A Brief Review
When it becomes difficult for the home owner to repay the first loan the best option for him is surely a Home Mortgage Refinance. It helps the borrower to repay the loan on time, lower the interest rates, and shorten the loan tenure as well. It may be called as the best solution for home owners.
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