Educated Consumers Can Save Money On Mortgages

Educated Consumers Can Save Money on​ Mortgages
Not only is​ owning a​ home an​ integral part of​ the​ American dream,​ but our home is​ likely the​ biggest purchase we will ever make and the​ biggest asset - or​ liability - we will ever have .​
Until about a​ year ago,​ of​ course,​ no one would have imagined that a​ home could be a​ liability .​
That's when housing prices started to​ drop and relatively new homeowners realized that it​ was only a​ matter of​ time before their adjustable rate mortgages would skyrocket .​
Experts agree that house values haven't yet reached their nadir and that many homeowners are poised on​ the​ precipice .​
While some people might find it​ easier to​ stick their heads in​ the​ proverbial sand,​ smart homeowners and homebuyers see the​ current market as​ an​ opportunity to​ either take a​ second look at​ their existing mortgages or​ to​ shop around for new mortgages .​
Either way,​ it's important to​ learn all that you​ can about different ways to​ finance a​ home before you​ take the​ plunge .​
Here are a​ few scenarios that illustrate some of​ the​ choices available today.
Nine years ago,​ Sam and Jenny Thompson bought a​ home that was ten years old .​
They were savvy enough to​ buy their house just before prices went through the​ roof .​
They have well over $100,​000 of​ equity in​ their home,​ but their home is​ showing signs of​ wear .​
It's time for a​ new roof,​ a​ new heating and air conditioning system,​ and they know that they need to​ have some dry rot repaired and have the​ house painted .​
They don't have much in​ savings,​ though,​ and want to​ borrow money so that they can get the​ repairs done .​
Sam and Jenny have a​ few options to​ pay for home improvement .​
They can refinance their home and get cash out for the​ repairs,​ they can get a​ home equity line of​ credit,​ or​ they can get a​ second mortgage .​
Which option is​ best depends largely on​ that status of​ their current mortgage .​
If they have a​ low interest,​ fixed rate loan,​ it​ probably doesn't make sense to​ refinance .​
If they're planning on​ staggering their home improvement over the​ next two years,​ it​ probably doesn't make sense to​ get a​ lump-sum second mortgage .​
Instead,​ a​ home equity line of​ credit might work best .​
On the​ other hand,​ if​ they have an​ adjustable rate mortgage,​ it​ might be financially prudent to​ refinance to​ a​ fixed rate loan and cash out part of​ their equity to​ make their home repairs .​
Cynthia and Bill Williams have owned their home for five years,​ but are concerned that Bill might be laid off in​ the​ next six months .​
They have quite a​ bit of​ money in​ savings,​ but have racked up considerable credit card debt .​
Because they're paying a​ high interest rate on​ their credit card debt,​ they may want to​ use a​ home equity line of​ credit for debt consolidation purposes,​ and to​ have a​ cushion in​ case Bill does lose his job .​
When Rebecca Richards bought her home two years ago,​ she thought housing prices would continue to​ soar and interest rates would go down .​
She bought her house with an​ adjustable loan and is​ terrified that,​ when the​ loan adjusts later this year,​ she won't be able to​ make her payments .​
In this scenario,​ Rebecca needs to​ meet with her lender now,​ rather than wait for the​ other shoe to​ drop .​
If possible,​ she should convert her adjustable rate home loan to​ a​ fixed rate loan.
The bottom line is​ that,​ whatever your circumstances,​ you​ need to​ learn all that you​ can about the​ options available to​ you​ .​
Thankfully,​ there are resources on​ the​ Internet that not only have a​ library of​ informative articles on​ mortgages,​ but that also provide the​ calculators and tools you​ need to​ find the​ answers to​ your questions .​
The best sites even offer a​ variety of​ loan programs and will prepare a​ personalized quote for the​ types of​ mortgages that you​ might be interested in.

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