It is no secret that, due to our current economy, interest rates
are at the lowest level in years and, ways to stretch a dollar and save
two are on everyone's mind. Many people are so focused that they are
missing a prime opportunity. This is a great time to refinance your
mortgage for more reasons than simply low interest rates. Of course,
this may be reason enough for some.
One of the best reasons to refinance is usually always to lower your monthly payments. While getting a lower monthly payment would give some a better night's sleep, for others it could be more like a lifeline enabling them to make ends meet. Although refinancing extends the period of your mortgage, this is typically offset by the fact that it can reduce your monthly mortgages payments by a sizeable amount. With the growing concern that even tougher times are ahead and in the midst of massive layoffs, many homeowners are using these saving to build an emergency fund. Others are refinancing to pay off costly credit card debt and any other types of debt with high interest rates.
For some refinancing now would get them out of riskier loans into a more stable fixed rate mortgages. However, this tactic is giving many homeowners peace of mind, but it usually does not decrease monthly mortgage payments. Instead, it can serve to raise the amount paid each month. Yet, getting out of interest-only loans in such an economy is worth the extra costs. Balloon mortgages are also good examples of loans that you may need to refinance in order to get out of, if possible.
Although it is not recommended for the majority of homeowners, there are circumstances in which a homeowner may refinance a fixed rate mortgage into an adjustable rate mortgages or ARM. If you are considering refinancing from a fixed rate mortgage to an ARM, the rule of thumb is that these types of refinancing strategies are only used for the short term. Actually, it is advised that you consider how long you plan to be in the particular home, the monthly and long-term savings, and be sure to consult a professional before deciding to refinance a fixed rate mortgage to an ARM.
Another great reason to refinance now is to eliminate the private mortgage insurance or PMI that is added onto monthly mortgage payments in instances where the homebuyer did not have the standard 20% down payment. PMI is a great savings, but only if you are able to refinance to a mortgage with no PMI, which has not been difficult in the past but may be a little harder today.
It is also common to refinance in order to get a shorter loan term. If you are in a position to pay off your mortgage sooner, you should definitely refinance in order to take advantage of this; especially, if you are trying to sell your home. However, refinancing to be able to sell your home may take different forms. You may need to refinance for a line of credit for home improvements and/or repairs. Which will probably be needed if you are trying to sell your home in this housing market, as this is a buyer's market.
Though the reasons to refinance varies depending on your particular situation, the time to refinance is definitely now. Before the rule of thumb, was to refinance only if interest rates dropped 2 points below your current mortgage interest rate. However, most homeowners are learning that significant savings can be gained when interest rates drop half a point below their current mortgage interest rate. When deciding to refinance timing is everything, because refinancing to tap the equity in your home and get a new mortgage or line of credit still requires you to qualify and get approval for a new loan. Therefore, deciding to refinance before you fall into default or foreclosure is key, as refinancing is typically not an option for homeowners who are in default and/or foreclosure. This could be a key motivator or pro in the decision for refinancing now.
If you are in a situation where you may need the extra money in order to make ends meet, you may be only hurting yourself by putting the decision to refinance off. In addition, if you feel that, you are fine now, but things may be tough in a month or two, then you definitely need to start assessing your refinancing options.
It is important that you get a consultation with an experienced lender and/or mortgage professional before refinancing your current mortgage to ensure that you are making the best decision for your particular situation. Also, be sure shop around before deciding to go with any particular mortgage lender.
One of the best reasons to refinance is usually always to lower your monthly payments. While getting a lower monthly payment would give some a better night's sleep, for others it could be more like a lifeline enabling them to make ends meet. Although refinancing extends the period of your mortgage, this is typically offset by the fact that it can reduce your monthly mortgages payments by a sizeable amount. With the growing concern that even tougher times are ahead and in the midst of massive layoffs, many homeowners are using these saving to build an emergency fund. Others are refinancing to pay off costly credit card debt and any other types of debt with high interest rates.
For some refinancing now would get them out of riskier loans into a more stable fixed rate mortgages. However, this tactic is giving many homeowners peace of mind, but it usually does not decrease monthly mortgage payments. Instead, it can serve to raise the amount paid each month. Yet, getting out of interest-only loans in such an economy is worth the extra costs. Balloon mortgages are also good examples of loans that you may need to refinance in order to get out of, if possible.
Although it is not recommended for the majority of homeowners, there are circumstances in which a homeowner may refinance a fixed rate mortgage into an adjustable rate mortgages or ARM. If you are considering refinancing from a fixed rate mortgage to an ARM, the rule of thumb is that these types of refinancing strategies are only used for the short term. Actually, it is advised that you consider how long you plan to be in the particular home, the monthly and long-term savings, and be sure to consult a professional before deciding to refinance a fixed rate mortgage to an ARM.
Another great reason to refinance now is to eliminate the private mortgage insurance or PMI that is added onto monthly mortgage payments in instances where the homebuyer did not have the standard 20% down payment. PMI is a great savings, but only if you are able to refinance to a mortgage with no PMI, which has not been difficult in the past but may be a little harder today.
It is also common to refinance in order to get a shorter loan term. If you are in a position to pay off your mortgage sooner, you should definitely refinance in order to take advantage of this; especially, if you are trying to sell your home. However, refinancing to be able to sell your home may take different forms. You may need to refinance for a line of credit for home improvements and/or repairs. Which will probably be needed if you are trying to sell your home in this housing market, as this is a buyer's market.
Though the reasons to refinance varies depending on your particular situation, the time to refinance is definitely now. Before the rule of thumb, was to refinance only if interest rates dropped 2 points below your current mortgage interest rate. However, most homeowners are learning that significant savings can be gained when interest rates drop half a point below their current mortgage interest rate. When deciding to refinance timing is everything, because refinancing to tap the equity in your home and get a new mortgage or line of credit still requires you to qualify and get approval for a new loan. Therefore, deciding to refinance before you fall into default or foreclosure is key, as refinancing is typically not an option for homeowners who are in default and/or foreclosure. This could be a key motivator or pro in the decision for refinancing now.
If you are in a situation where you may need the extra money in order to make ends meet, you may be only hurting yourself by putting the decision to refinance off. In addition, if you feel that, you are fine now, but things may be tough in a month or two, then you definitely need to start assessing your refinancing options.
It is important that you get a consultation with an experienced lender and/or mortgage professional before refinancing your current mortgage to ensure that you are making the best decision for your particular situation. Also, be sure shop around before deciding to go with any particular mortgage lender.
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