Is your home loan interest rate higher than the national average? Is your home in need of some much-needed repairs or are you in need of some extra money to pay off credit cards or other bills? A mortgage refinance loan may be exactly what you need to take care of these needs and any others that you might think of.
If your interest rate is higher than normal, it is a good idea to refinance your loan. A lower interest rate can make your monthly payment lower and easier to manage. If you are having financial difficulties, this can be especially helpful. If your finances are pretty steady, then you may be able to get a shorter-term loan when you refinance so your loan will be paid off much sooner. This is great if you are planning to stay in your home for the rest of your life or for longer than the length of the loan. If you are planning to move within ten years, then a shorter-term loan will most likely not be as important to you as a lower payment would be.
If you are in need of some money to pay off credit cards, make needed home repairs, or even to take a vacation, then you might want to consider refinancing your home. You first need to find out if you have any equity built up in your home. Equity is the value of your home versus the amount that you own on your house. Let us say that your home is now worth $125,000 ten years after you purchased it and you owe your lender $95,000. The equity that you have is $30,000. You can borrow up to $125,000 against your home and can use the $30,000 equity for repairs, bills, or anything else. You need to decide if your intended use is worth you refinancing your loan for 15 years or more. The good thing about home loans is that they are tax-deductible in most cases, so this may be a good benefit for you.
Refinancing will mean that in most cases you are starting your payment term all over again. This is something that you need to keep in mind before signing on the dotted line. You need to know all of your options before you decide that this is your only option. Home loan refinancing is a big business and many companies will offer you the moon to get you to refinance. You need to take into account the closing costs and fees of the loan to ensure that it is a right choice for you.
If you do all of your research and come to the conclusion that refinancing is right for you then you need to find a lender that you are comfortable with. Check around to several different lenders to find the best interest rate for your loan to ensure that you are getting the best deal. Then you are sure to find a mortgage refinance loan that you are satisfied and happy with!
By: Paul Heath
Posts Tagged ‘Loan Refinance’
Do You Need a Mortgage Refinance Loan?
April 26th, 2010When Should I Refinance My Adjustable Loan?
April 18th, 2010
I wish I would have never taken out this adjustable loan. What do I do now?
For the past several years so many people have taken out adjustable loans only to later realize that at some point, when the loan adjusts, that their monthly payment might be higher than they can really afford. Furthermore, many of these adjustable loans included a prepayment penalty. Such a penalty forces the borrower to pay a large fee to close out a loan, whether you refinance or sell.
Therefore the first step in deciding whether to refinance is to find out exactly what type of loan you have. Call your lender at the number provided on the mortgage statement and find out if your loan is in fact fixed or adjustable. If they tell you it is fixed be sure to ask, “for how long is it fixed?” If they say 5 years or less, you really have an adjustable loan. Most adjustable loans were packaged in 2, 3 or 5 year increments. Only if they tell you that your loan is the same rate for 15 years, 20 or 30 years do you have a true fixed rate loan.
The next step is to then find out if you have a prepayment penalty and just how much extra it will cost to actually refinance out of your present loan program. Some prepayment penalties will be equal to 6 months of mortgage payments. Others are for a percentage of the outstanding loan amount, (i.e. 1% or 2% etc).
Finally you need to find out when your prepayment penalty is going to expire. For example many adjustable mortgages have a fixed rate for 2 years and then will adjust. After 2 years your prepayment penalty should also expire. Hopefully this is the case so you can move forward and take advantage of the great refinance rates that are presently available.
However, if your loan is to adjust after 2 years but your prepay penalty won’t expire for 3 years then you are in an unfortunate position because odds are your monthly payment is going higher and in the mean time you will be stuck paying a prepayment penalty if you choose to refinance and if you do not refinance because of the penalty, than you are stuck with one more year of higher monthly payments.
Fortunately most reputable lenders and loan officers set up their client’s adjustable loans to adjust after 2 or 3 years. If your loan was fixed for 2 years the penalty would end after 2 years, and if your loan was to adjust after 3 years the penalty would end after 3 years.
So be proactive and find out exactly what type of loan you have and you will be well on your way to knowing whether it is a good time to refinance or not.
Good Luck and Happy Hunting.
By: Allen Sayble