When Should You Refinance A Second Mortgage

When Should you​ Refinance a​ Second Mortgage?
A second mortgage allowed you​ to​ get the​ house that you​ wanted or​ to​ have extra cash for some project - but that was a​ few years ago .​
You have built up some equity in​ the​ house and are now wondering if​ it​ would be a​ good time to​ refinance your second mortgage .​
Here are some things you​ need to​ know in​ order to​ help you​ make that decision intelligently .​
Refinancing your second mortgage can be a​ good deal if​ the​ interest rates are better than what you​ already have .​
Otherwise,​ not only would you​ be increasing your payments,​ but you​ would also be adding the​ cost of​ refinancing to​ it,​ too .​
If the​ current interest rates are lower than what you​ are paying now,​ by at​ least a​ full percent,​ then it​ could be a​ good move to​ refinance .​
Or,​ if​ you​ have built up a​ sizable equity since you​ took out a​ second mortgage,​ then now could be a​ good time.
Refinancing a​ second mortgage means that there are two ways for you​ to​ go .​
One way is​ to​ get a​ second mortgage for all of​ the​ equity built up in​ your house - a​ home equity loan .​
a​ second way,​ which could be less costly,​ is​ a​ home equity line of​ credit (HELOC) .​
A third option may also be available - refinance everything .​
This would be especially appealing if​ you​ have an​ adjustable rate mortgage for your first mortgage .​
Interest rates are not exactly promising at​ the​ moment and you​ may want to​ look for something that is​ predictable for many years to​ come .​
Of course,​ you​ would only want to​ consider this option if​ you​ are planning on​ living in​ your present home for a​ few more years to​ come .​
The cost of​ refinancing everything would involve taking a​ few years to​ recoup the​ costs of​ doing just that .​
If you​ choose to​ get a​ HELOC arrangement for a​ new second mortgage,​ then you​ have the​ option of​ having cash available - but it​ is​ also cash that you​ do not have to​ pay interest on​ until you​ use it .​
There is​ an​ assigned period of​ time that you​ have to​ use the​ designated amount (the equity you​ have) - usually this is​ about eight to​ ten years - depending on​ the​ time frame of​ the​ second mortgage .​
The last roughly two-thirds of​ the​ mortgage is​ the​ time that you​ repay the​ amount you​ used .​
All interest is​ only based on​ the​ amount that you​ use .​
In order to​ save even more money when you​ get a​ new second mortgage,​ be sure to​ keep it​ reasonably short .​
Remember that the​ longer time frame you​ have on​ a​ mortgage,​ the​ more you​ are paying in​ interest .​
Talk to​ the​ lender to​ see what your options are for the​ amount of​ money you​ want.
As with any mortgage,​ be sure to​ learn all of​ the​ details involved .​
This includes understanding what other companies may offer if​ you​ were to​ deal with them .​
Money can be saved by comparing and also by negotiating for a​ better deal .​
They will usually work with people who want to​ negotiate,​ and they do expect it.

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