Refinancing Your Property
There are a number of reasons why one would look at refinancing their home such as, when there is a major drop in interest rates, paying for major expenses like a child’s education, debt consolidation, or simply the desire to renovate or take a great vacation.The following guidelines can help you get a better understanding of the costs and benefits of refinancing so you can make a decision that is truly in your best interest.
Getting a Lower Interest Rate Mortgage
Whenever interest rates drop, homeowners might have the opportunity to save money. Lower interest rates generally translate into lower mortgage loan rates, and refinancing your mortgage at a lower rate can reduce your monthly payment.
Deciding whether to refinance your home comes down to a basic calculation: Will your savings from reduced mortgage payments be greater than the up-front costs? That's where a Mortgage Agent can help.
Refinancing is generally worthwhile if the new interest rate is a percentage point lower than your existing mortgage rate. One should use a calculator to make certain you are going to save money. The interest rate cut required to come out ahead will vary dramatically depending on how long you plan to hold the new mortgage, how many years you've already paid on the current mortgage, the costs to arrange a new mortgage and penalties if any.
To determine the feasibility of refinancing why not try our Mortgage Refinance Interest Savings calculator.
Debt Consolidation
Consolidating your debt is another reason why people refinance their mortgage. It allows you to repay your debts to several or all of your creditors at once. You are then left with only one outstanding loan — to the financial institution. In addition to streamlining your debts into a single payment, a debt consolidation loan may also offer you an interest rate that is lower than that charged by your creditors saving you money in interest charges. This option can be especially attractive if you have outstanding debts at a relatively high rate of interest on credit cards.
Try our Personal Debt Consolidator calculator to help you determine if debt consolidation is right for you.
Borrowing Against Your Home Equity Through a Line of Credit
When faced with a significant expense, such as medical costs, a new addition to your house, or a child's college education, you may find that you don't have the necessary cash on hand. In such a situation, you may want to consider a new mortgage, second mortgage or a home equity loan. Since the motivation to refinance in this situation is more than just a lower interest, you can consider this option at any time, as long as you have equity in your home. Home Mortgage Refinancing is basically replacing an existing loan or mortgage with a new one in order to benefit from the drop in the rates of interest. Any person with a Home Mortgage and with the capability to pay off the mortgage can qualify.
By using the equity in your home resulting from the pay down of your mortgage and/or the increase in the value of your home from market conditions, you may qualify for a sizable amount of credit, available for use when and how you please.
You should carefully weigh the costs against the benefits of this option and talk to one of our Mortgage Agents for more specific information about your personal situation.
