How to save by refinancing
your mortgage
What is refinancing?
Refinancing your mortgage
gives you the chance to replace your current mortgage with a new loan
having more favorable rates and terms.
Your monthly payments will be reduced if you refinance your mortgage for
one with a lower rate.
If you have enough home equity, you can borrow more than the current
loan balance. With the extra cash, you can pay off high interest debts
like credit card balances. One note about refinancing your mortgage and
using some of the money to pay off credit card balances is: the interest
is tax deductible.
When to refinance your
mortgage
Current market rates are
low:
Follow the 2% Rule. You can enjoy the benefits of a home refinance if
you get an interest rate 2% lower than that on your current loan. The
interest savings will help you recoup the costs you've paid for the new
loan. There is no limit on the number of times you can go for home
refinance loans.
Remove negatives and improve credit score:
Review your credit report for any negative items and inaccurate detail.
Try to dispute negative items and remove them from the report. If
required pay off any unpaid debt.
When not to refinance your
mortgage
If your property value
reduces and you refinance up to 80% of the reappraised value, your
original mortgage amount may be higher than this amount.
If you are making payments on a long term loan, say, 30 year mortgage
for the past 10 to 20 years, then refinancing to another 30 year loan
will not be a good option as it may increase your overall payment.
You only have a few years left on the current loan:
If there are only a few years left on your current loan, it's no use
refinancing with a long term loan. You may need extra cash but with a
long term loan, you'll end up paying more for the entire loan term.
Refinancing your mortgage makes sense if you do it for the right reasons
and at the right time. You need to decide whether you'd go for a simple
refinance or take out extra cash too.
Information on Refinancing
Your Mortgage
If you're wondering where
you can find more information on mortgage refinancing, you're sitting in
front of the best tool available, your computer. There is no easier way
to find a mortgage refinance company than by doing some comparison
shopping online.
Look for sites that give importance to the financial strength and
reputation of the companies. |
