Mortgage Refinance - When the Need Arises

2007-03-08 10:33:40

( Financial )



Paying your debts can be manageable thru mortgage refinance. Mortgage refinance means getting another loan of almost the same amount to pay for your current loan. Typically refinancing is done when you have a mortgage on your home. The goal of mortgage refinance is to reduce your monthly loan payments through lowering your interest rates. This is possible since mortgage refinance rates are usually lower than that of your current mortgage interest rates. It also helps you in:

• consolidating your debts / bills
• paying off a contract for deed
• lowering your current interest rate

Student loan refinance holds the same promise. If your monthly payment is too high, you can lower it by extending the duration of your loan which is one way to refinance student loans. However, it means more interest payments and in the long run, you end up paying more. A shorter mortgage term is more beneficial since most of your payment goes back to the capital loaned instead of going to interests. For example, if you are currently on a 15 year, 5.5% mortgage and have 7 years remaining, perhaps you can get a 5-year mortgage with a 6.5% or lower refinance interest rates. If you compute the odds, you will have better savings through a shorter term. Besides, you don’t have to pay longer.

It’s is all about timing

You might ask, when is the right time to refinance my mortgage? Interest rates fluctuate and might change daily. You need to know first the prevailing mortgage refinance rates so it will be favorable to you, meaning lower. This is to determine whether you can actually save on interests given that you have to pay for refinancing costs. If you plan to stay in your home for a short time, it might not help to refinance since you have to pay for refinancing costs and you might not have enough time to recover the fees.

Risks that you should know

In every benefit, there is a corresponding risk so you have to weigh them against each other. While taking the decision to go for the refinancing option, it is important to know the risks that you have to take. Here are some of them:

• refinancing make cause greater losses if lenders foreclose
their property
• it allows lenders to go after your other properties such as cars or
unrelated real estate holdings

It all depends on how you weigh the benefits and risks of refinancing. But when the need arises, you can always get free refinance quotes and mortgage interest rates comparisons online, where you can also search for several lenders and loan programs.


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