Home Loan Mortgage Loan Refinance – Refinancing For A Shorter Term To Save Money
Saving money with lower rates isnt the only reason to refinance. Opting for a shorter loan can also save thousands in interest and free up income in the future. A short term loan can also help you pay down your principal quicker.
Better Rates
A 15 year mortgage has a better rate than a 30 year mortgage offered the same day usually by a quarter of a percent. However, even if rates are the same as your current mortgage, refinancing to a shorter mortgage can save you thousands in interest by paying off the principal sooner. Your monthly payments will be slightly larger, but that is because a larger portion of the balance is being paid.
Offers Self-Discipline
Short term loans make your decision to pay off your mortgage official. For those that have a hard time making extra payments on their mortgage, a short term mortgage may be the answer.
It is helpful to first look at your long term financial goals. Perhaps you are planning to pay for kids college tuition, to retire, or to reduce your debt load in the future. Decide when you want your mortgage paid off and look at the monthly payments. You can choose a number of periods 15, 20 or 25 year home loans.
Factors To Consider
Low rates arent the only factor to consider when deciding to refinance, the payment period is also important. By simply making larger principal payments, you get rid of your loan sooner and save money on interest payments. Additionally, reducing your debt level by paying off your mortgage also improves your credit and financial situation.
However, you should also remember the immediate impact of a short term mortgage. A larger monthly payment can put a strain on your monthly budget. You may also find that if you plan to sell your home within a couple of years, you will not recoup the cost of refinancing fees.
You are also limiting your financial flexibility. You are committing yourself to a larger principal payment. You could choose to simply pay down the principal when you have the available cash.
In the end, short term mortgages do have their benefits and should be considered when you plan to refinance.
Posted by admin at 12:31 pm on September 8th, 2010.
If you have lived in your home for a period of time that has allowed you to build equity through appreciation and monthly mortgage payments, you may be considering liquidating some of that equity through cash out refinancing.
Cash out refinancing means to refinance your home by paying off your existing mortgage, usually at a lower rate if possible, and borrowing off the equity in your home in the way of receiving a lump sum at the closing table.
Cash out refinancing is primarily used by people for various reasons, such as home improvement, college tuition, the purchase of a new car, a family vacation, etc.
Keep in mind, the money you borrow from your cash out refinancing is also tax deductible, so for example, using this money to buy a new car would make smart financial sense, as opposed to using a car loan to buy a car.
Cash out refinancing is a nice mortgage program because it gives you the freedom and the power to accomplish things that you otherwise would not have been able to do.
The mortgage industry is a very competitive one, so be sure to take your time and shop around. Allow for a few different lenders or mortgage brokers to assess your situation and base your decision on the program that best fits your needs and your budget. Good luck.
Posted by admin at 12:31 pm on May 12th, 2010.
Refinancing is to pay off your existing mortgage with another one at a lower rate.
A cash out refinance is refinancing your existing mortgage and borrowing some of your equity in a lump sum to use for other purposes. Such as home improvement, college tuition, family vacation, etc.
Other reasons people use a cash out refinance is to use the equity in their home to invest in real estate, or start their own business.
Cash out refinances are very good tools when used for the right reasons. It is not wise to do cash out refinancing if you are going to receive a higher interest rate than what you already have on your current mortgage.
If you have a really good rate on your current mortgage, it would be wise to leave it alone.
However, if you are looking to tap into the equity you have acquired in your home without touching your current mortgage, you may want to consider a Home Equity Loan.
With a home equity loan you can borrow the equity you have acquired without touching your first mortgage. The home equity loan is also referred to as a second mortgage.
For instance, if you have acquired 50,000.00 worth of equity in your home, you can borrow what you need of that equity, without your first mortgage being affected.
The cash out refinance and the home equity loan are very similar and serve almost the same purpose, your situation should determine the right choice for you.
As always, I want to leave you with this reminder. Do your homework, educate yourself, and shop around for the best deal.
Posted by admin at 12:31 pm on May 5th, 2010.
Title:
Cash Out Refinancing & Home Equity Loan
A cash out refinance is refinancing your existing mortgage and borrowing some of your equity built in your home over the years in a lump sum. Reasons for the cash can be due to home improvements, college tuition, family vacation to name a few. The smart ones usually use a cash out refinance is to invest in real estate, or start their own business and build a steady stream of income.
Cash out refinances are very good financial tools when used for the right reasons. If interest rates are high, It is not wise to do cash out refinancing if your existing mortgage sits on a really good rate.It would certainly be wise to leave it alone until the right time comes to the fore. However, if you need the cash badly and are looking to tap into the equity you have accumulated in your home without touching your current mortgage, you may want to consider a home equity loan.
With a home equity loan you can borrow the equity you have acquired without touching your first mortgage. For example, if you have acquired $60,000.00 worth of equity in your home, you can borrow within that equity value you without your first mortgage being affected. The cash out refinance and the home equity loan are very similar and serve almost the same purpose, your situation should determine which of the two is the right choice for you.
By the way, the home equity loan is also referred to as a second mortgage.
Posted by admin at 12:31 pm on April 21st, 2010.
