Thursday, October 27, 2005
Start Again with Mortgage Refinancing
If you are interested in optimizing your monthly payments on debt, or simply looking to stretch your income a little further each month, you might want to consider refinancing your mortgage.
There are two very basic ways to go about this. First, you might consider switching from a fixed rate home loan, to an adjustable rate home loan. A fixed rate home loan is a loan in which your interest rate is "locked in" and does not change from year to year. An adjustable rate home loan is a loan in which your interest rate is dictated by the market.
The other option is referred to as a "cashout" refinance, in which all your old loans are paid and new ones taken out. This is a sensible option, because the interest you are paying on the original loans is compounded and you eventually start paying interest on interest. A new loan can provide you with the fresh start you need.
When a lender is considering your mortgage refinance application they take into consideration a number of factors including current balance, monthly payment, and the remaining number of months on your current mortgage. Your household income and your debt-to-asset ration will also be considered.
If you are looking to consolidate your debt load or to simply maximize your disposable income, mortgage refinancing might well be your solution. There are few potential drawbacks to consider, mind you. Many lenders will charge extra fees for early or unscheduled payments, so be sure to ask your lender as many questions as you can.
In the case of mortgage refinancing, you may want to consider consulting a mortgage broker. A broker works for you, and not for any particular financial institution. He can take your application, and shop it around to various lenders. This will give you the freedom to determine, to some degree, the terms of your mortgage. It can often result in major cost savings, because you essentially pit one lender against the other for your business. It is definitely something worth looking into, if you are serious about saving some money. If you aren't serious about saving money, you should be.
There are two very basic ways to go about this. First, you might consider switching from a fixed rate home loan, to an adjustable rate home loan. A fixed rate home loan is a loan in which your interest rate is "locked in" and does not change from year to year. An adjustable rate home loan is a loan in which your interest rate is dictated by the market.
The other option is referred to as a "cashout" refinance, in which all your old loans are paid and new ones taken out. This is a sensible option, because the interest you are paying on the original loans is compounded and you eventually start paying interest on interest. A new loan can provide you with the fresh start you need.
When a lender is considering your mortgage refinance application they take into consideration a number of factors including current balance, monthly payment, and the remaining number of months on your current mortgage. Your household income and your debt-to-asset ration will also be considered.
If you are looking to consolidate your debt load or to simply maximize your disposable income, mortgage refinancing might well be your solution. There are few potential drawbacks to consider, mind you. Many lenders will charge extra fees for early or unscheduled payments, so be sure to ask your lender as many questions as you can.
In the case of mortgage refinancing, you may want to consider consulting a mortgage broker. A broker works for you, and not for any particular financial institution. He can take your application, and shop it around to various lenders. This will give you the freedom to determine, to some degree, the terms of your mortgage. It can often result in major cost savings, because you essentially pit one lender against the other for your business. It is definitely something worth looking into, if you are serious about saving some money. If you aren't serious about saving money, you should be.
# posted by yw6ad @ 1:13 AM 
