Why Refinance Back into a 30-Year Loan?
Refinance Your Mortgage for Rate and Payment Reductions
By Jansen Drake, CMS
1st Metropolitan Mortgage
Marietta, GA – One of the biggest reasons homeowners refinance their mortgage is to obtain a lower interest rate and lower monthly payments. By refinancing, the borrower pays off their existing mortgage and replaces it with a new one. This can often be accomplished with a no-points no-fees loan program, which essentially means at �no cost� to the borrower.
In the no-points no-fees scenario, the mortgage consultant uses rebate monies paid by the lender to pay off non-recurring closing costs for the borrower. These are �one time� fees such as escrow or attorney fees, title insurance, document preparation, tax service, flood certification, processing and underwriting fees, etc. The borrower is still responsible for recurring fees such as interim insurance, property taxes or insurance policy payments.
Refinancing typically occurs when mortgage interest rates drop significantly, but borrowers with recently improved credit scores (from paying off credit card debt, making mortgage payments on time, etc.) are often candidates for better interest rates as well. If you haven't checked your credit score in a while, it's a good time to call a mortgage consultant.
The question most asked is, �But why should I go back into a 30-year loan?�
There are two schools of thought on this subject, and the mortgage consultant should work hand-in-hand with the borrower's financial planner to determine what works best for their mutual client.
One option is to take the route of the �same payment� refinance, and actually pay off the loan faster and save money on interest fees in the long-run. If refinancing results in a lower monthly payment, the borrower can still continue making the same payment they made in the original loan, and the extra money will be applied to the principal balance.
For example: Let's say you have 25 years remaining in your current loan, and you refinance back to a 30-year loan with a slightly lower interest rate, resulting in a payment reduction of $200 per month. (Note: This is just an example. The actual amount could vary.) You could then take that extra $200 per month and apply it toward the principal on the new loan. At this rate, the loan will be paid off in 22 years and 4 months, which is 2 years and 8 months less than the original loan.
On the other hand, if the borrower's financial planner is a proponent of best-selling author and investment guru Douglas Andrew's philosophies (see Missed Fortune), he or she may suggest investing the extra money in a side-fund that could earn a better rate of return and grow to the amount of the mortgage (and beyond) in even less time. This method provides excellent liquidity, but having more direct access to this money may be too tempting for some homeowners.
Regardless of the reason for the refinance, the mortgage consultant will need to know what the existing loan scenario entails, review the homeowner's long-term goals, and provide a comprehensive spreadsheet that compares and contrasts the various loan programs available.
Bear in mind, refinancing to obtain a lower interest payment could also result in a lower deduction at tax time. The homeowner's mortgage consultant and financial planner should work hand-in-hand with their mutual client's best interest in mind.
About the Author
Jansen Drake is affiliated with 1st Metropolitan Mortgage, A Georgia Residential Mortgage Licensee 15506. For free consultation and a copy of The Certified Guide to Credit Scoring ,call Jansen at 678-388-1755 or go to www.catquickloans.com.
Monday, November 26, 2007
Why Refinance Your Home?
There are many reasons why you may be interested in refinancing you home. The biggest reason is to save money. When you refinance your mortgage, you are more than likely able to substantially reduce your monthly payments. One tactic people use is to shop the rate around to several different lenders to see what they have to offer and what deals work for them. You may have bought your home in times of relatively high mortgage rates and therefore are locked into higher payments than you should be. If you qualify for a lower rate, you could lock in that mortgage rate and stretch out the payments so that every month you are paying less to live in your home than before. If you decide to refinance your home, you will undoubtedly be confronted with a variety of choices as to what sort of new loan you can get. Refinancing your home mortgage can certainly free up a lot of capital, which gives you the opportunity to do many things, such as needed home improvements, travel, investments or your children's college tuition. Many people who are deeply in credit card debt may want to refinance their homes in order to free up some of their home equity and pay off their other debts. This can be a good strategy if the debt is at a high interest rate. It makes good financial sense to pay off debt, which can be as high as 25% with a new loan at around 6% or 7%. People who refinance their homes often come out better than before. Don't forget to shop around and find the best deal your can for your mortgage and you may be able to have a lot of spare money every month. https://www.imortgagefinancial.com
About the author:
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About the author:
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Why should I refinance?
If you bought your home a few years back when annual interest rates were 12 percent, refinancing now can save you a great deal of money over the term of the mortgage. Or you might be able to switch from a 30-year mortgage to a 15-year, so you can pay off your loan in half the time with roughly the same monthly payments.
Refinancing can be worthwhile, but it does not make good financial sense for everyone. A general role of thumb is that refinancing becomes worth your while if the current interest rate on your mortgage is at least 2 percentage points higher than the prevailing market rate.
There are various reasons to refinance your home:
1. To lower the interest rate on your mortgage, reducing your monthly payments and overall cost;
2. To reduce the term or length of your loan, doing so can save you thousands of dollars in interest;
3. To provide a means of consolidating your debt;
4. To draw on the equity built up in the house to get cash for a major purchase or for children's education;
5. Have an adjustable-rate mortgage (ARM) and want a fixed-rate loan to have the certainty of knowing exactly what the mortgage payment will be for the life of the loan.
It is better to refinance if you can get an interest rate at least two percentage points lower than what you are currently paying. However, every situation is different. Some lenders are offering reduced fees or no points. Asking yourself a few questions may help you determine if you can save money:
1. How much can I lower my current monthly payment? 2. How much will I pay in refinancing costs? 3. How much will I still owe on the house? 4. How much am I currently paying each month? 5. How much did I initially pay for the house?
There are other considerations, too, such as how long you plan to stay in the house. Most sources say that it takes at least three years to realize fully the savings from a lower interest rate, given the costs of the refinancing. Itemize all the expenses of the refinance and estimate your new monthly payments. Answering these questions can help you to decide if you should refinance.
Before settling on a refinancing deal, you might want to engage a lawyer to look out for your interests and make sure everything is filled out properly. Talk with mortgage lenders, real estate agents, attorneys, and other advisors about lending practices, mortgage instruments, and your own interests before you commit to any specific loan.
About the author:
Copyright � 2005. Chileshe Mwape writes for the Mortgage Lenders website at http://banks.lending-guide.org/ and he's also a regular contributor to the Auto Loans website at http://www.motor-car-loans.org.uk/
Refinancing can be worthwhile, but it does not make good financial sense for everyone. A general role of thumb is that refinancing becomes worth your while if the current interest rate on your mortgage is at least 2 percentage points higher than the prevailing market rate.
There are various reasons to refinance your home:
1. To lower the interest rate on your mortgage, reducing your monthly payments and overall cost;
2. To reduce the term or length of your loan, doing so can save you thousands of dollars in interest;
3. To provide a means of consolidating your debt;
4. To draw on the equity built up in the house to get cash for a major purchase or for children's education;
5. Have an adjustable-rate mortgage (ARM) and want a fixed-rate loan to have the certainty of knowing exactly what the mortgage payment will be for the life of the loan.
It is better to refinance if you can get an interest rate at least two percentage points lower than what you are currently paying. However, every situation is different. Some lenders are offering reduced fees or no points. Asking yourself a few questions may help you determine if you can save money:
1. How much can I lower my current monthly payment? 2. How much will I pay in refinancing costs? 3. How much will I still owe on the house? 4. How much am I currently paying each month? 5. How much did I initially pay for the house?
There are other considerations, too, such as how long you plan to stay in the house. Most sources say that it takes at least three years to realize fully the savings from a lower interest rate, given the costs of the refinancing. Itemize all the expenses of the refinance and estimate your new monthly payments. Answering these questions can help you to decide if you should refinance.
Before settling on a refinancing deal, you might want to engage a lawyer to look out for your interests and make sure everything is filled out properly. Talk with mortgage lenders, real estate agents, attorneys, and other advisors about lending practices, mortgage instruments, and your own interests before you commit to any specific loan.
About the author:
Copyright � 2005. Chileshe Mwape writes for the Mortgage Lenders website at http://banks.lending-guide.org/ and he's also a regular contributor to the Auto Loans website at http://www.motor-car-loans.org.uk/
Why should you refinance?
Refinancing has become a valid option for many individuals with high interest rates on their mortgage. Refinancing is essentially a replacement loan, with a different lender and (hopefully) a lower interest rate.
So why would you choose to refinance?
- You may be able to take advantage of lower interest rates.
- You may also be able to extend the repayment period of your mortgage. While you will end up paying more in interest charges for this, this will reduce your monthly outgoings.
- You may be able to switch from a variable rate to a fixed rate mortgage, giving you greater security in the future from potential rate increases.
- You may also be able to increase the amount of your mortgage, to pay off other, higher interest rate liabilities such as credit card debt, cell phone debt and personal loan debt. This will enable you to save money on interest rate charges
Why would you avoid refinance?
If you decide to borrow more than your existing mortgage, you need to be wary of your budget. If you default on your payments you run the risk of losing your house.
If you do not calculate the costs involved with refinancing correctly, you could end up paying more in interest charges.
Thoroughly review the contract of your existing loan, an early pay out could involve a penalty that would negate the benefits of refinancing.
What will it cost me?
Refinancing does carry some costs that you need to be made aware.
Valuation Fee – This is the fee for a professional appraisal of the value of your house.
Credit Report – An assessment of your credit health
Escrow – Fee for money transferred by a third party.
Lender Fees – Any other fees that are incurred by using a particular lender
Am I eligible?
Applying for mortgage refinance is just like applying for another loan. There is a set criteria for acceptance. Every missed mortgage payment will count against you in the application, either resulting in a greater interest rate or a refused application.
Should I choose refinancing?
You will need to assess your current mortgage and the changeover costs and savings to ascertain whether it will be of benefit to you. There are specific refinancing calculators that can help you determine the net gain. The best one that I have found is at calcbuilder.com.
As a rule of thumb many lenders advocate that a 1% gap between your current interest rate and a refinance rate makes refinance a worthwhile option.
Always make sure to speak to a financial professional before deciding to refinance your mortgage.
About the author:
More mortgage refinance information available at http://members.optusnet.com.au/~mortgagearticles/
So why would you choose to refinance?
- You may be able to take advantage of lower interest rates.
- You may also be able to extend the repayment period of your mortgage. While you will end up paying more in interest charges for this, this will reduce your monthly outgoings.
- You may be able to switch from a variable rate to a fixed rate mortgage, giving you greater security in the future from potential rate increases.
- You may also be able to increase the amount of your mortgage, to pay off other, higher interest rate liabilities such as credit card debt, cell phone debt and personal loan debt. This will enable you to save money on interest rate charges
Why would you avoid refinance?
If you decide to borrow more than your existing mortgage, you need to be wary of your budget. If you default on your payments you run the risk of losing your house.
If you do not calculate the costs involved with refinancing correctly, you could end up paying more in interest charges.
Thoroughly review the contract of your existing loan, an early pay out could involve a penalty that would negate the benefits of refinancing.
What will it cost me?
Refinancing does carry some costs that you need to be made aware.
Valuation Fee – This is the fee for a professional appraisal of the value of your house.
Credit Report – An assessment of your credit health
Escrow – Fee for money transferred by a third party.
Lender Fees – Any other fees that are incurred by using a particular lender
Am I eligible?
Applying for mortgage refinance is just like applying for another loan. There is a set criteria for acceptance. Every missed mortgage payment will count against you in the application, either resulting in a greater interest rate or a refused application.
Should I choose refinancing?
You will need to assess your current mortgage and the changeover costs and savings to ascertain whether it will be of benefit to you. There are specific refinancing calculators that can help you determine the net gain. The best one that I have found is at calcbuilder.com.
As a rule of thumb many lenders advocate that a 1% gap between your current interest rate and a refinance rate makes refinance a worthwhile option.
Always make sure to speak to a financial professional before deciding to refinance your mortgage.
About the author:
More mortgage refinance information available at http://members.optusnet.com.au/~mortgagearticles/
Why Talk about Your Finances to Strangers?
Blogging is the latest innovation to take the web by storm. According to blog tracking firm Technorati, there are currently 20.6 million blogs with thousands more added every day. According to Blogherald, 30% of internet users (50 million people) are blog readers. In short, a lot of people are reading and writing blogs.
A popular blogging sub-segment is the one centered on money and personal finances. The web hosts a wide variety of people talking about money, giving financial advice, and tracking their own finances electronically. But why do these bloggers share some of the most intimate details of their personal finances?
"Personal financial blogging compliments the money management articles I write," notes Jeffrey Strain of Personal Finance Advice. "While articles are able to give the basics of how to implement money saving techniques and ways to invest, the blog allows me to show step by step how I use the information in my daily life."
Others began blogging out of a need to get a handle on their money. "I started blogging because I was fresh out of college and making more money than I'd ever seen before," states Jonathan of MyMoneyBlog. "I had almost two thousand dollars of disposable income every month. Instead of moving into a nice apartment in the city and buying a BMW like my friends, I maxed out my 401(k), stayed in my college apartment, and started this blog to document my thoughts, ramblings, successes, and mistakes towards my goal of financial freedom and traveling the world."
The final perspective that seems common among financial bloggers is one centered more around the reader than the blogger. FMF of Free Money Finance and JLP of All Things Financial are good examples of this approach. "I'm sharing principles that have helped me grow my net worth substantially in an effort to help others do the same," comments FMF. JLP has similar reasons. "I have a personal finance blog to share information that I think is important with my readers. My blog essentially allows me to publish a low-cost newsletter and save trees at the same time. I also like the fact that I can link to important information (something that is hard to do with a paper newsletter)."
But no matter the reason for blogging, these financial bloggers draw from their own personal experiences and write about them quite honestly. Here are some examples:
JLP has shared the details of the H&R Block tax class he's been taking
FMF has given his criteria for when he will and won't use a financial planner
Jonathan has detailed his renting woes
Jeffrey has covered (in detail and with pictures) the $235 bet he lost
No matter what their reason for writing, all of these blogs are both informative and entertaining. It's easy to see why readers keep coming back for more.
About the author:
Courtesy of Saving Advice
A popular blogging sub-segment is the one centered on money and personal finances. The web hosts a wide variety of people talking about money, giving financial advice, and tracking their own finances electronically. But why do these bloggers share some of the most intimate details of their personal finances?
"Personal financial blogging compliments the money management articles I write," notes Jeffrey Strain of Personal Finance Advice. "While articles are able to give the basics of how to implement money saving techniques and ways to invest, the blog allows me to show step by step how I use the information in my daily life."
Others began blogging out of a need to get a handle on their money. "I started blogging because I was fresh out of college and making more money than I'd ever seen before," states Jonathan of MyMoneyBlog. "I had almost two thousand dollars of disposable income every month. Instead of moving into a nice apartment in the city and buying a BMW like my friends, I maxed out my 401(k), stayed in my college apartment, and started this blog to document my thoughts, ramblings, successes, and mistakes towards my goal of financial freedom and traveling the world."
The final perspective that seems common among financial bloggers is one centered more around the reader than the blogger. FMF of Free Money Finance and JLP of All Things Financial are good examples of this approach. "I'm sharing principles that have helped me grow my net worth substantially in an effort to help others do the same," comments FMF. JLP has similar reasons. "I have a personal finance blog to share information that I think is important with my readers. My blog essentially allows me to publish a low-cost newsletter and save trees at the same time. I also like the fact that I can link to important information (something that is hard to do with a paper newsletter)."
But no matter the reason for blogging, these financial bloggers draw from their own personal experiences and write about them quite honestly. Here are some examples:
JLP has shared the details of the H&R Block tax class he's been taking
FMF has given his criteria for when he will and won't use a financial planner
Jonathan has detailed his renting woes
Jeffrey has covered (in detail and with pictures) the $235 bet he lost
No matter what their reason for writing, all of these blogs are both informative and entertaining. It's easy to see why readers keep coming back for more.
About the author:
Courtesy of Saving Advice
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