Refinancing Second Mortgage Knowing When To Refinance

Refinancing Second Mortgage – Knowing When to​ Refinance
Timing the​ refinancing of​ your second mortgage is​ just as​ important as​ finding low rates and fees .​
Before you​ decide to​ refinance,​ make sure that you​ have a​ clear benefit .​
Either save money with lower rates or​ protect yourself with the​ security of​ a​ low fixed rate second mortgage.
When Lower Rates Equal Savings
Lower rates can equal savings if​ you​ have enough time to​ recoup any closing costs or​ other fees .​
In most instances,​ a​ point drop of​ two percent or​ more with seven years left on​ the​ loan makes it​ cost efficient to​ refinance .​
To see if​ this is​ true in​ your case,​ compare what you​ are paying now with the​ potential payment of​ a​ new mortgage.
Combining both your first and second mortgages will further reduce your rates and save on​ application fees .​
This only works if​ your primary mortgage has high rates currently.
Protect Yourself From Rising Rates
With an​ adjustable rate second mortgage,​ refinancing can protect you​ from rising interest rates .​
Even with caps in​ place,​ you​ could see your current loan period length,​ adding to​ your total loan costs.
Refinancing for a​ fixed rate home equity loan will provide you​ with the​ security of​ a​ regular payment schedule .​
In some cases,​ you​ may also find a​ lower fixed rate than your current adjustable rate.
Timing is​ Important With Refinancing
With most home equity loans,​ you​ pay most of​ the​ interest at​ the​ beginning of​ the​ payment period .​
So by the​ last half of​ your loan,​ you​ are paying hardly any interest .​
To see the​ biggest savings,​ you​ need to​ refinance early.
If you​ plan to​ move soon,​ then you​ will also want to​ hold off on​ refinancing .​
While closing costs usually only equal 1% to​ 3% of​ principal,​ it​ takes a​ couple of​ years to​ regain these costs.
To see if​ you​ have a​ clear benefit to​ refinancing,​ start looking at​ loan quotes .​
Figure the​ potential costs of​ interest and fees,​ and compare them to​ your current second mortgage .​
Factor in​ your future financial goals,​ and you​ will have a​ good idea if​ refinancing is​ for you.

You Might Also Like:

Powered by Blogger.