By John Harris
Refinancing can be a great money saving tool for homeowners, or it can be the wrong thing at the wrong time. Last year, according the Mortgage Bankers Association, Americans refinanced to the tune of $1.17 trillion dollars. The rising cost of fixed rate mortgages drove that to a mere $938 million this year. That’s still a huge number of people who choose to refinance their homes or commercial mortgages. Here are some guidelines to help you decide if this is the right time for you to refinance.
What to Know Before You Refinance
You need to be able to answer some basic questions about your home or real estate investment before you can make a wise decision about the best time to refinance. For instance, what is your current interest rate? Is it fixed or variable? Is your home’s value increasing? Can you afford the closing costs associated with refinancing? What are your plans for your home or real estate?
This background knowledge will help in several ways. If you plan to move within the next three years, or if the difference in interest rates in less that 1.5%, then refinancing might not pay off right now. Remember, once you refinance you need time to recoup the closing costs you have invested. However, if you have a variable rate that is climbing, or a significantly higher fixed rate, refinancing may offer you some appealing options.
Why People Refinance
People refinance for different reasons. In many cases, the decision to refinance can help to reduce your monthly payments and interest, or reduce the life of your loan and the principle owed. Others obtain a cash-out closing to make home improvements or pay off consumer and credit card debt. This method usually doesn’t lower your payments.
Before You Decide to Refinance
But before you jump into a decision to refinance, be aware that there are costs involved. Closing costs and points will affect how much money you must pay up front to refinance. A point is equal to 1% of the total amount of your loan. You should expect to pay 2-3% in points when you refinance. Just like when you purchased your home or real estate investment, the more money you put down, the lower your interest rate is likely to be. There are instances where you can get a no-cost closeout, and these are ideal, but not always available.
A word of caution; if you find yourself refinancing yearly to pay off debt, you’re not doing yourself any favors. In this situation you are probably increasing both the life and principle balance of your loan amount. This is a short-term fix that can have long-term consequences.
What Can Help
To help get the lowest interest rate when you refinance you can do one of two things. Put as much money as you can down upfront, or use that money to pay off consumer credit card debt. Since your interest rate and the amount you can borrow are tied to your credit score, it can save you money to improve your rating before you refinance.
And don’t forget to shop around. You will find a lot of lenders willing to work with you, and mortgage rate calculators are available on many real estate websites. A little homework now will save you a lot of money later.
About the Author: John Harris is a researcher and writer on applicable real estate topics such as economics, credit improvement tips, home selling advice and home buying preparations. For more information please visit San Diego Realtors
Source: www.isnare.com
Permanent Link: http://www.isnare.com/?aid=158869&ca=Real+Estate
Sunday, August 17, 2008
Wednesday, May 14, 2008
Do We Need To Refinance?
By Robert Michael
There are plenty of reasons why people chose to refinance. The needs for home improvements, sending a child to college or simply lower their monthly mortgage are a few. You need to find a loan company that offers you the best rate when you chose to refinance. Comparison-shopping is a wise thing to do before you refinance.
With the rising cost in college tuition choosing to refinance is becoming more popular. No one wants to deny sending their child of to college to better their education and become successful in life. This is why people look into refinancing their home or mortgage. There are a few different options, consulting a loan specialist would better help you decide which option is for you.
Another reason people chose to refinance is to lower there monthly mortgage payments or interest. This allows them more room to breathe when coming up with the money to pay for your mortgage or interest. When you chose to refinance it is also a way to get money to make improvements to your home.
You could just want to pay off your car loan. That is another reason that you would decide refinancing is right for you. Knock out that monthly payment and focus on other expenses. If you don't already have a car you would use the money to purchase one. Either for yourself or as a gift for your high school graduate.
A very popular reason that you would choose to refinance with a loan is debt consolidation. Pay off accumulated debts, such as credit card or medical bills. This reason may be increasing in the near future with the new bankruptcy law soon to go into effect. It gets rid of the frustration of bill collectors calling and mailing your home. It is an uncomfortable thing to deal with debt and no one likes to stress over bills that they can't pay. So choosing to refinance to knock out those bills is a wise step to take. This will also help you to improve your credit rating.
You may not even be concerned with any of the above reasons. You could just be looking for a way to take a family vacation or some kind of long awaited trip. Whatever your reason there is no wrong reason if you chose to refinance with a loan. As long as it is something that will benefit you and paying it back will not be a hassle.
There are plenty of competitors that will offer you a chance to refinance for what ever your reasons may be. Look for them on the Internet or call around and compare quotes. Some lenders will even match the lowest quote you can find.
About the Author: Robert Michael is a writer for Apre Finance which is an excellent place to find finance links, resources and articles. For more information go to: http://www.aprefinance.com
Source: www.isnare.com
Permanent Link: http://www.isnare.com/?aid=67806&ca=Finances
There are plenty of reasons why people chose to refinance. The needs for home improvements, sending a child to college or simply lower their monthly mortgage are a few. You need to find a loan company that offers you the best rate when you chose to refinance. Comparison-shopping is a wise thing to do before you refinance.
With the rising cost in college tuition choosing to refinance is becoming more popular. No one wants to deny sending their child of to college to better their education and become successful in life. This is why people look into refinancing their home or mortgage. There are a few different options, consulting a loan specialist would better help you decide which option is for you.
Another reason people chose to refinance is to lower there monthly mortgage payments or interest. This allows them more room to breathe when coming up with the money to pay for your mortgage or interest. When you chose to refinance it is also a way to get money to make improvements to your home.
You could just want to pay off your car loan. That is another reason that you would decide refinancing is right for you. Knock out that monthly payment and focus on other expenses. If you don't already have a car you would use the money to purchase one. Either for yourself or as a gift for your high school graduate.
A very popular reason that you would choose to refinance with a loan is debt consolidation. Pay off accumulated debts, such as credit card or medical bills. This reason may be increasing in the near future with the new bankruptcy law soon to go into effect. It gets rid of the frustration of bill collectors calling and mailing your home. It is an uncomfortable thing to deal with debt and no one likes to stress over bills that they can't pay. So choosing to refinance to knock out those bills is a wise step to take. This will also help you to improve your credit rating.
You may not even be concerned with any of the above reasons. You could just be looking for a way to take a family vacation or some kind of long awaited trip. Whatever your reason there is no wrong reason if you chose to refinance with a loan. As long as it is something that will benefit you and paying it back will not be a hassle.
There are plenty of competitors that will offer you a chance to refinance for what ever your reasons may be. Look for them on the Internet or call around and compare quotes. Some lenders will even match the lowest quote you can find.
About the Author: Robert Michael is a writer for Apre Finance which is an excellent place to find finance links, resources and articles. For more information go to: http://www.aprefinance.com
Source: www.isnare.com
Permanent Link: http://www.isnare.com/?aid=67806&ca=Finances
Subscribe to:
Posts (Atom)
Posts
