Get A Lower Interest Rate
If you get a lower interest rate when
you do a mortgage refinancing for the
same principal, you can significantly
lower your monthly mortgage payments.
Before deciding to refinance, you have
to factor in how long you intend to stay
in your current home.
There are upfront fees involved when refinancing
your mortgage. For it to be worthwhile,
the monthly savings from the lower interest
rate must outweigh the mortgage refinancing
costs divided by the total monthly payments
of the new mortgage loan.
The longer you stay in your current home,
the lower the monthly payment for the
upfront fees. Mortgage refinancing costs
can range from 3% to 6% of the principal
outstanding.
Change The Type Of Mortgage Loan
You currently have an adjustable rate
mortgage (ARM). You picked it for its
lower monthly mortgage payments due to
its lower rate at the beginning of the
loan term. Interest rates have dropped
since you got your ARM and you can obtain
a lower fixed rate for the whole life
of the loan. Knowing that the mortgage
loan is fixed at an attractive rate can
give you peace of mind. The interest rate
could be adjusted twice a year or yearly
depending on the type of ARM.
Increase Your Home Equity At A
Quicker Rate
You financial situation has improved since
you got your mortgage. You want to increase
your monthly payment so you can pay off
your mortgage loan at a quicker rate.
If you have a 30 year mortgage, you want
to refinance your mortgage with a shorter
term (10, 15 or 20 year mortgage).
The shorter term means that more of your
monthly mortgage payment will go towards
paying down your principal, boosting the
equity in your home.
Take Out Equity From Their Home
You need money for a particular reason
(Debt consolidation, children’s
college tuition or home renovations) and
are looking to tap in to the equity that
you have built in your home. Basically,
you are looking to take money out of your
home.
To do a mortgage refinancing cash out,
most lenders require at least 5% equity
in your property. Home equity is the difference
between the value of your property and
the amount still owed on the mortgage.
Credit Rating Has Improved
In the current market environment, even
people with bad credit can obtain a mortgage
to purchase a home. The flip side is in
order to get the mortgage loan, the interest
rate charged is very high.
Since then, you have worked hard to improve
your financial situation. With your better
credit rating, you can now get a mortgage
with better terms and interest rates.
This permits significant monthly savings
on your mortgage.
|
