Mortgage Refinancing How It Can Help You

Mortgage Refinancing How It Can Help You



Mortgage Refinancing: how it​ can help you
When people talk about refinancing their mortgage,​ they are usually talking about swapping their old mortgage at​ a​ high interest rate with a​ new mortgage at​ a​ lower interest rate .​
With rates lower on​ 15 and 30 year fixed rate mortgages by around a​ whole half a​ percent,​ many families have been taking advantage of​ rate refinancing .​
a​ half of​ a​ percent,​ or​ 50 basis points(.50),​ may not sound too significant,​ but when compounded out over a​ year,​ or​ many years for that matter,​ you​ can be looking at​ a​ savings of​ several thousand dollars or​ several tens of​ thousands of​ dollars .​
So you​ many want to​ inquire with you​ loan holder about refinancing if​ current rates are lower than the​ rate that is​ on​ your loan documentation.
Refinancing can also be used to​ do what is​ known as​ cash out refinancing .​
With this type of​ financial transaction,​ you​ need to​ have access to​ equity in​ your home .​
As an​ example,​ if​ you​ owe $100,​000 on​ a​ $300,​000 mortgage,​ you​ have $200,​000 of​ equity .​
You can take out $200,​000,​ pay off the​ remaining $100,​000,​ and the​ use the​ remaining money for whatever you​ like,​ such as​ home repairs or​ additions .​
Whether or​ not you'll be able to​ take out a​ full $200,​000 depends on​ the​ institution that you​ do business with .​
in​ some instances you​ may be able to​ eliminate your private mortgage insurance premiums by refinancing .​
If when you​ took out a​ loan for your home,​ you​ were not able to​ come up with a​ twenty percent down payment,​ you​ could currently be paying private mortgage insurance(PMI) .​
However,​ if​ the​ equity in​ your home is​ now more than that twenty percent,​ you​ should ask your loan holder if​ upon refinancing the​ PMI will be eliminated .​
People also refinance to​ get out of​ an​ adjustable rate mortgage(ARM) and into a​ fixed rate mortgage .​
Often times one opts for an​ ARM when rates are low and look good,​ but the​ future of​ rates is​ uncertain .​
Now,​ that fixed rates are relatively low,​ it​ may be advantageous to​ switch into a​ fixed rate mortgage if​ you​ want to​ know exactly what you​ will need to​ pay each month for the​ life of​ your loan .​
One can also attempt to​ refinance the​ length of​ their loan to​ save money on​ interest payments in​ the​ long term .​
If a​ family has a​ 40 year mortgage,​and their incomes have risen in​ recent years,​ it​ may be beneficial to​ refinance into a​ 30 year mortgage to​ pay less interest over the​ life of​ a​ loan .​

Another very interesting way to​ use a​ home equity loan is​ to​ consolidate credit card debt and make credit card interest a​ tax deduction for yourself .​
You can potentially save yourself a​ lot of​ headaches if​ you​ use your home equity to​ help alleviate the​ pain caused by credit cards .​
But,​ you​ should consults a​ financial professional to​ see if​ this is​ a​ reality for your situation.




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