| Determine your main goal |
Do you want to refinance because you would like
to save money each month? Would you like to get some
cash out? Are you in a ARM that is adjusting and
you would like to get into a fixed mortgage?
Once you know the reason for refinancing, you
should ask your mortgage specialist whether or
not it would be beneficial for you to refinance
at this time or whether it may be more beneficial
to wait. |
| Find out if you qualify for a government
subsidized loan |
Almost 30 million Americans qualify for a VA Loan.
With a VA Loan, you can qualify for a VA Streamline
Refinance. You may also be able to refinance your home
with an FHA Streamline refinance. |
| Take into consideration how long you
will live in your current home |
If you plan on moving out of your existing home within
the next few years, it may not be beneficial for you
to refinance. Make sure you let your mortgage specialist
know your future plans. |
| Can you consolidate your Debt with a
Loan Refinance? |
Refinacing your mortgage can allow you to take cash
out of the equity which you have built in your home.
You can pay off your higher interest debts and pay
all of your debts at a lower interest rate. This will
allow you to save money on a monthly basis and achieve
your financial security. |
| If you are able to get a lower interest
rate |
If you are able to get a lower rate that what you
currently have, you can save tens of thousands of dollars
over the life of your loan. Also, most lenders don't
charge as many fees to refinance a mortgage and depending
on how much equity you have in your home you may be
able to roll the closing costs into your new loan,
still have a lower balance than your original loan,
a lower rate, and a lower payment. |
| Change the term of you mortgage |
Changing the term of your mortgage can help in several
ways. First, if you were to refinance your current
mortgage from 30 years to 15 years, you will accelerate
the rate at which you pay towards principle each month
meaning your house will be paid off quicker. Also,
you will save an unbelievable amount of money in terms
of interest because you would likely be taking 10 to
15 years off the life of your loan. Second, you can
also refinance a 15 year mortgage to a 30 year mortgage.
It seems like it might not make sense to do this, but
if you have an immediate need to free up monthly cash-flow
and you don't want to take out a home equity loan,
this can work out to your benefit. When you take a
15 year loan and refinance it to 30 years you will
have the same balance only the payments can be hundreds
of dollars less than the 15 year loan. The only draw
back to this is you will pay more in interest over
the live of the loan. |
| You need a large amount of cash, now |
When you do a cash-out refinance you are leveraging
the equity in your home in order to receive a lump
sum of cash at closing. Many individuals and families
use this type of loan if they want to remodel their
home, or they have kids that are attending college
soon. |
| You know you will be moving soon |
If you know that you will be moving in 3 to 5 years,
you might want to consider refinancing to a 3 or 5
year ARM (adjustable rate mortgage). These loans typically
have a much lower rate that a traditional fixed rate
loan such as a 30 year fixed, but they do have a fixed
rate for the first 3 or 5 years of the loan. This will
enable you to benefit from the lower rate, but you
won't ever have to worry about the risk of a rate adjustment
because you will be selling the home before the fixed-rate
period ends. |
