Refinancing Mortgages Wise Moves To Save Money

Refinancing Mortgages Wise Moves To Save Money 1

Refinancing Mortgages: Wise Moves to​ Save Money
With the​ unsettling conditions in​ the​ home loan market today,​ homeowners are wisely looking at​ their options for refinancing mortgages .​
Fluctuating interest rates,​ slowing house prices and the​ sub-prime mortgages crisis have all helped to​ send the​ home buyers market into a​ spin .​
Making the​ decision to​ switch lenders or​ re-arrange mortgages could be an​ excellent move,​ if​ it’s for the​ right reasons .​
Refinancing mortgages to​ release equity.
One of​ the​ main reasons for refinancing mortgages is​ to​ free up the​ equity already built up in​ the​ property .​
Many homeowners are tempted to​ go down this route to​ clear other debts,​ pay for new cars or​ vacations,​ or​ for school fees for example .​
While refinancing mortgages can help,​ borrowers need to​ be aware that the​ overall mortgage term would be extended and payments will go up to​ meet the​ higher amount of​ the​ loan .​
On the​ other hand,​ releasing equity for investments,​ new businesses and other ventures can be a​ lucrative move if​ the​ expected return is​ higher than the​ interest rate on​ the​ mortgage.
Refinancing mortgages for a​ lower interest rate .​
This is​ generally the​ best money saving reason for refinancing .​
Mortgages with a​ fixed rate could be costing home owners more money if​ the​ interest rate drops by a​ reasonable amount .​
Homeowners must,​ however,​ take into account the​ cost of​ refinancing mortgages – lenders fees,​ home appraisals,​ and legal costs all add up .​
Generally this method will reduce the​ regular mortgage payments but only if​ the​ amount of​ the​ loan is​ not increased,​ or​ any cash equity is​ released .​
Refinancing mortgages to​ build equity .​
Circumstances change and homeowners who now have a​ better income,​ or​ fewer outgoings should consider refinancing mortgages for a​ shorter term in​ order to​ build up the​ equity in​ their homes quicker .​
With 10 or​ 15 year loan terms as​ opposed to​ the​ original 30 years for example,​ can save borrowers a​ vast amount of​ money in​ the​ future .​
Of course,​ refinancing mortgages in​ this way will cost more each month,​ but the​ loan will be paid off much earlier and the​ equity in​ the​ home will increase faster .​
Other good reasons for refinancing mortgages include changing the​ type of​ loan to​ take advantage of​ the​ market conditions,​ or​ to​ improve the​ type of​ mortgage after rebuilding a​ better credit rating .​
There are many things to​ consider when refinancing mortgages,​ not least the​ current state of​ the​ market,​ the​ homeowners’ financial position and particularly their future plans .​
There would be little point in​ refinancing now,​ if​ the​ borrower intends to​ sell their home within a​ short period of​ time .​
Fees and legal costs would likely cancel out any potential short-term savings .​
Refinancing mortgages should be a​ carefully thought out decision,​ taking into account all the​ important aspects of​ changing lenders,​ the​ market conditions and interest rates .​
The main consideration should always be whether re-mortgaging will improve the​ borrower’s financial position in​ the​ longer term.

Refinancing Mortgages Wise Moves To Save Money

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