There are many great reasons to refinance. We are not always allowed to meet our financial goals because of lower cost, adjustable rate, and 0-down options, traditional loan programs like 30-year or 15-year fixed rate mortgages. Today, you can save big over the life of your home loan even when reducing your mortgage interest rate a little. Have a look at 5 great reasons why you should refinance.
Your Monthly Payment can be Lowered It may make sense to pay a point or two to decrease your interest rate and overall payment if you plan to live in your home for a few years. You will have paid for the cost of the mortgage refinance with the monthly savings over the long run. But if what you are planning to do is moving in the near future, then this would mean you may not be in your home long enough to recover the refinancing costs. Before you decide to refinance, you should first calculate the break-even point because this can help determine whether it makes sense.
Switching From An Adjustable Rate To A Fixed Rate Mortgage Adjustable rate mortgages (ARMs) can provide lower initial monthly payments for those who are willing to risk upward market adjustments. Also, they are ideal in case you are not planning to own your property for more than a few years. However, you may want to swap your adjustable rate for a 15-, 20- or 30-year fixed rate mortgage if you have made your house a permanent home. Your interest may be higher than with an ARM, but you have the confidence of knowing what your payment will be every month for the rest of your loan term.
All about Escape Balloon Payment Programs Balloon programs, like adjustable rate mortgage programs, are great when you want to lower rates and lower initial monthly payments. However, the entire balance of your mortgage is due to the lender if you still own the property at the end of the fixed rate term (usually 5 or 7 years). You can easily switch over into a new adjustable rate mortgage or fixed rate mortgage if you are in a balloon program.
Remove Private Mortgage Insurance (PMI) With zero or low down payment options, homeowners will be allowed to purchase homes with less than 20% down. What's unfortunate is that private mortgage insurance, which is designed to protect the lender from loan default, will be required most of the time. As the value of your home increases and the balance on your home decreases, you may be eligible to remove your PMI with a mortgage refinance loan.
How to Cash in on Your Home's Equity A great resource for extra cash is your home. Your home, like most homes, probably has increased in value and that gives you the ability to take some of that cash and put it to good use. You can make home improvements, pay tuition, replace your current car, take a long-overdue vacation or even pay off credit cards. With a cash-out mortgage refinance transaction, it's easy. Not to mention it is also deductible.
Your Monthly Payment can be Lowered It may make sense to pay a point or two to decrease your interest rate and overall payment if you plan to live in your home for a few years. You will have paid for the cost of the mortgage refinance with the monthly savings over the long run. But if what you are planning to do is moving in the near future, then this would mean you may not be in your home long enough to recover the refinancing costs. Before you decide to refinance, you should first calculate the break-even point because this can help determine whether it makes sense.
Switching From An Adjustable Rate To A Fixed Rate Mortgage Adjustable rate mortgages (ARMs) can provide lower initial monthly payments for those who are willing to risk upward market adjustments. Also, they are ideal in case you are not planning to own your property for more than a few years. However, you may want to swap your adjustable rate for a 15-, 20- or 30-year fixed rate mortgage if you have made your house a permanent home. Your interest may be higher than with an ARM, but you have the confidence of knowing what your payment will be every month for the rest of your loan term.
All about Escape Balloon Payment Programs Balloon programs, like adjustable rate mortgage programs, are great when you want to lower rates and lower initial monthly payments. However, the entire balance of your mortgage is due to the lender if you still own the property at the end of the fixed rate term (usually 5 or 7 years). You can easily switch over into a new adjustable rate mortgage or fixed rate mortgage if you are in a balloon program.
Remove Private Mortgage Insurance (PMI) With zero or low down payment options, homeowners will be allowed to purchase homes with less than 20% down. What's unfortunate is that private mortgage insurance, which is designed to protect the lender from loan default, will be required most of the time. As the value of your home increases and the balance on your home decreases, you may be eligible to remove your PMI with a mortgage refinance loan.
How to Cash in on Your Home's Equity A great resource for extra cash is your home. Your home, like most homes, probably has increased in value and that gives you the ability to take some of that cash and put it to good use. You can make home improvements, pay tuition, replace your current car, take a long-overdue vacation or even pay off credit cards. With a cash-out mortgage refinance transaction, it's easy. Not to mention it is also deductible.
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