Chances are years ago, when you took out your mortgage, you took it out for 30 years or more. You were just starting out in life, money was tight and your salary was still on the lower side of the pay scale. As the years have gone by, and you've moved up in your career and in life, you may find that you have extra money each month that you want to put to good use. One of the things you may want to think about to do with that money is to refinance your home mortgage for a shorter term to help you pay off your house quicker with less overall interest payments.
Let's face it, money is hard enough to come by, and paying unnecessary interest is something that all of us can do without. With home mortgages you will often find that the lower the term of the mortgage, the better the interest rate is. Basically, the mortgage company is giving you a better overall deal because they don't have to wait as long for their money and their exposure is less to possible risk. The faster you pay it off, the faster they get their money back (plus interest).
Often times, you already have the lowest interest rate you can get for your mortgage. This is where refinancing to a lower term can help. Typically, interest rates for 30-year and 15-year mortgages vary by as much as a whole percent point, with the average being somewhere around 0.75%. If you find that you are into the 10th year of your 30-year mortgage it may make sound financial sense to refinance into a 15-year mortgage at the lower rate so you can take advantage of the interest rate benefits - as long as you can afford the higher monthly payments.
So why not just continue along in your present mortgage and pay extra each month? While this was a popular option not too long ago, today many mortgage companies penalize you for making early payments. After all, now you aren't giving them the fixed rate of return they were planning on. This consumer-unfriendly practice is widespread and is just another reason why refinancing is one of your best moves.
It's important to keep in mind a few things before running into a refinance, however. First, realize that you will be paying more per month since you are lowering the length of the loan. More of this money is going to your equity, and you will see significant savings in the long run. However, you have to be prepared financially to do it. Don't risk losing your home if you think this might cause financial hardship down the road! Next, make sure that you understand the fees associated with it. As you near the end of your mortgage it may not be in your best interest to refinance depending on how long you have left. The savings you earn in interest rate reductions may not equal what you pay to get them.
So if you find that you have a little extra cash in your pocket and are looking for a way to make a sound financial investment, consider looking into refinancing your home mortgage to take advantage of shorter terms and lower interest rates. The money you save could go towards more important things - such as retirement or the boat of your dreams!
I found this must see website for some of the best information on equity building. You may want to take a look at this website here.
Wednesday, January 28, 2009
Sunday, January 4, 2009
The Plus Side of the Housing Crisis
With the recent housing crisis creating shaky economic ground; interest rates and property values have fallen in historic proportions. For those with decent credit, now is the time to consider buying property. Buying property now with prices falling and property values low is a bonus. When you buy under these conditions and hold until the property valuses rise again you will generate automatic equity without ever lifting a finger.
This is a buyers market now in the housing situation. For anyone considering buying property, now is the time to do it. Just make sure that you buy someting that can have the potential to go up in value.
With the recent housing crisis creating shaky economic ground; interest rates and property values have fallen in historic proportions. For those with decent credit, now is the time to consider buying property. Buying property now with prices falling and property values low is a bonus. When you buy under these conditions and hold until the property valuses rise again you will generate automatic equity without ever lifting a finger.
This is a buyers market now in the housing situation. For anyone considering buying property, now is the time to do it. Just make sure that you buy someting that can have the potential to go up in value.
Monday, December 29, 2008
How to Determine if You Have a Good Mortgage Broker
It is very important to have a good mortgage broker. The person that is on your side must be someone that you can trust. Mortgage brokers come in all different packages from fancy to plain and there is no shortage of them out there.
You will find that you can feel very good about the entire loan process if you have a very good mortgage broker. The loan should go easily and with very little stress. You will also be able to ask questions anytime you want and will be able to understand what is going on.
How do you know if you have made the right choice in choosing your mortgage broker? There are some ways that you can tell at once if you have made a good choice.
The first way is to use your common sense. Does your broker help you with a positive attitude? Do you feel good about your decision to use this broker? These things can really make the home buying experience a positive one for you.
Does your broker miss appointments or is excessively late? Red flag. You may have a problem starting if they are always canceling appointments on you.
The broker should also be able to give you some details about different mortgages and mortgage programs from memory. A broker that uses this information day in and day out will remember some facts. Constantly having to refer to papers for even the most basic of information should be a warning signal.
Mortgage brokers offer not only initial loans when buying the home, but also handle refinancing as well so it is vitally important that you have a reputable person to deal with.
You will find that you can feel very good about the entire loan process if you have a very good mortgage broker. The loan should go easily and with very little stress. You will also be able to ask questions anytime you want and will be able to understand what is going on.
How do you know if you have made the right choice in choosing your mortgage broker? There are some ways that you can tell at once if you have made a good choice.
The first way is to use your common sense. Does your broker help you with a positive attitude? Do you feel good about your decision to use this broker? These things can really make the home buying experience a positive one for you.
Does your broker miss appointments or is excessively late? Red flag. You may have a problem starting if they are always canceling appointments on you.
The broker should also be able to give you some details about different mortgages and mortgage programs from memory. A broker that uses this information day in and day out will remember some facts. Constantly having to refer to papers for even the most basic of information should be a warning signal.
Mortgage brokers offer not only initial loans when buying the home, but also handle refinancing as well so it is vitally important that you have a reputable person to deal with.
Saturday, December 27, 2008
Refinancing a Mortgage: The Essential Guide to Saving More Money on Mortgages
A lot of homeowners may have been enjoying mortgage rates that are lower than what you have right now, only it isn't easy to admit . Why? Simply because obtaining lower mortgage rates isn't that easy. First, you have to think of the refinancing options that mortgage lenders will provide you in case you want to lower your rates. Lending companies wouldn't give you something good without the necessary qualification.
So the next step is for you to consider if it is time for you to refinance your mortgage. Some people think that refinancing their mortgage will be a great deal easier to do because of the financial history they've built with the company. Most of them believe that refinancing is always a good option for getting lower rates. In some ways, refinancing a mortgage can be a good idea, but it still hinges upon the situation or on the type of mortgage that you have.
Lending companies may no longer need new research on your properties or a simple property assessment. In most cases, lending companies are also willing to give lower rates.
All of these things are easily provided to those who wish to refinance their mortgages because lending companies believe that it's easier to maintain a paying customer than to find another one.
So the question now lies on whether it is time for you to refinance or not because not all refinancing options are created equal. This goes to show that every refinancing option may differ from the others and would entirely depend upon the sort of program you wish to pursue.
For example, would you like to have a plain refinancing option for your mortgage? Or would you like to have lower rates and still cash out to pay down other debt?
Before you can decide on such things, it's best that you consider first the reasons why you're refinancing your mortgage in the first place. Here are some of the common reasons consumers make whenever they decide on refinancing their mortgages:
1. To gain benefit from an enhanced credit rating
Some people are lucky enough to get mortgages despite their bad credit rating. However, they may have to suffer the consequence such as having higher interest rates. As time goes by, these consumers try to establish their credit rating by paying their payments on time. Nevertheless, having high rates of interest can be very expensive to maintain. That's why they opt to refinance and desire for lower interest rates.
In this way, refinancing now could be the best time for you to save more rather than to continue paying higher rates of interest despite your good credit rating. Besides, maintaining higher interest rates may only bring you troubles considering the fact that at any point in time, you may not be able to sustain higher interest charges.
2. Modify your loan
If you've chosen an adjustable mortgage rate in the first place, you may find it reasonable now to acquire a fixed-rate mortgage considering the discrepancies on the interest rates. Adjustable rate mortgage may appear very low at some points in time because they're primarily contingent on the different factors that affect the interest rates set by the Federal Reserve System. But then again, adjustable rate mortgage can change a maximum of twice a year. So that goes to show that interest rates such as these can change from time to time. So to speak, you can get either a lower or a higher rate depending on the kind of adjustable rate mortgage you have.
On the other hand, fixed-rate mortgage can give you lower rates ultimately because they don't change whatever happens. So if you want to convert your loan into a fixed-rate mortgage, you have to refinance your mortgage.
3. Get a lower interest rate and cash out and pay other debts
Some consumers want to have a better deal. They want to refinance their mortgage but would also like to cash out at closing so that they can use the money to pay their other debts.
It's like hitting two birds with one stone. There are some people taking control of their home equity whenever the prime rate is lower than the standard rate of a fixed-rate mortgage with a 30-year pay out plan.
Financial experts say that getting home equity is the better option at this point because the rates will be cheaper. However, as time goes by, cashing out and still getting lower rates through refinancing options remains the best choice. Refinancing your mortgage to a lower rate and still get to cash out to pay your other debts would simply mean getting more than what you presently have a loan from, and subsequently taking the change. For example, you have an existing loan of $50,000 on a $90,000 house. You've decided to get a lower interest rate on that loan and still get $10,000 cash to pay off your auto loan.
Through cash-out refinancing, you can easily get your heart’s desire by refinancing your mortgage from $50,000 to $60,000. In that way, you were able to lower your mortgage interest rate on your standing balance of $50,000 and still get cash as you wish.
With all these things, refinancing might just be the answers to your prayers. You see, it really pays to know the difference. Don't just take somebody’s word for it. Work on it…now!
A lot of homeowners may have been enjoying mortgage rates that are lower than what you have right now, only it isn't easy to admit . Why? Simply because obtaining lower mortgage rates isn't that easy. First, you have to think of the refinancing options that mortgage lenders will provide you in case you want to lower your rates. Lending companies wouldn't give you something good without the necessary qualification.
So the next step is for you to consider if it is time for you to refinance your mortgage. Some people think that refinancing their mortgage will be a great deal easier to do because of the financial history they've built with the company. Most of them believe that refinancing is always a good option for getting lower rates. In some ways, refinancing a mortgage can be a good idea, but it still hinges upon the situation or on the type of mortgage that you have.
Lending companies may no longer need new research on your properties or a simple property assessment. In most cases, lending companies are also willing to give lower rates.
All of these things are easily provided to those who wish to refinance their mortgages because lending companies believe that it's easier to maintain a paying customer than to find another one.
So the question now lies on whether it is time for you to refinance or not because not all refinancing options are created equal. This goes to show that every refinancing option may differ from the others and would entirely depend upon the sort of program you wish to pursue.
For example, would you like to have a plain refinancing option for your mortgage? Or would you like to have lower rates and still cash out to pay down other debt?
Before you can decide on such things, it's best that you consider first the reasons why you're refinancing your mortgage in the first place. Here are some of the common reasons consumers make whenever they decide on refinancing their mortgages:
1. To gain benefit from an enhanced credit rating
Some people are lucky enough to get mortgages despite their bad credit rating. However, they may have to suffer the consequence such as having higher interest rates. As time goes by, these consumers try to establish their credit rating by paying their payments on time. Nevertheless, having high rates of interest can be very expensive to maintain. That's why they opt to refinance and desire for lower interest rates.
In this way, refinancing now could be the best time for you to save more rather than to continue paying higher rates of interest despite your good credit rating. Besides, maintaining higher interest rates may only bring you troubles considering the fact that at any point in time, you may not be able to sustain higher interest charges.
2. Modify your loan
If you've chosen an adjustable mortgage rate in the first place, you may find it reasonable now to acquire a fixed-rate mortgage considering the discrepancies on the interest rates. Adjustable rate mortgage may appear very low at some points in time because they're primarily contingent on the different factors that affect the interest rates set by the Federal Reserve System. But then again, adjustable rate mortgage can change a maximum of twice a year. So that goes to show that interest rates such as these can change from time to time. So to speak, you can get either a lower or a higher rate depending on the kind of adjustable rate mortgage you have.
On the other hand, fixed-rate mortgage can give you lower rates ultimately because they don't change whatever happens. So if you want to convert your loan into a fixed-rate mortgage, you have to refinance your mortgage.
3. Get a lower interest rate and cash out and pay other debts
Some consumers want to have a better deal. They want to refinance their mortgage but would also like to cash out at closing so that they can use the money to pay their other debts.
It's like hitting two birds with one stone. There are some people taking control of their home equity whenever the prime rate is lower than the standard rate of a fixed-rate mortgage with a 30-year pay out plan.
Financial experts say that getting home equity is the better option at this point because the rates will be cheaper. However, as time goes by, cashing out and still getting lower rates through refinancing options remains the best choice. Refinancing your mortgage to a lower rate and still get to cash out to pay your other debts would simply mean getting more than what you presently have a loan from, and subsequently taking the change. For example, you have an existing loan of $50,000 on a $90,000 house. You've decided to get a lower interest rate on that loan and still get $10,000 cash to pay off your auto loan.
Through cash-out refinancing, you can easily get your heart’s desire by refinancing your mortgage from $50,000 to $60,000. In that way, you were able to lower your mortgage interest rate on your standing balance of $50,000 and still get cash as you wish.
With all these things, refinancing might just be the answers to your prayers. You see, it really pays to know the difference. Don't just take somebody’s word for it. Work on it…now!
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