Refinance Homes - When to refinance Home Loan

Refinance Homes - When to refinance Home Loan

In this article will give you a guide about Refinance Homes. 

Refinancing your home can be a great way to lower your monthly mortgage payment, get money for another big purchase, or consolidate debts with high interest rates. But you need to investigate before taking this step. An important factor is the difference between the interest rate you pay now and the interest rate after refinanciar.Tambien need to calculate the necesitario period to recoup the cost of refinancing.   

When you should refinance homes? 

Some reasons which homeowners refinanced include: Lower monthly payments Convert an adjustable rate mortgage (ARM) to a fixed rate mortgage Raise funds for extraordinary expenses of the family (for example, send a child to college) Pay off other loans with a high interest rate Home remodeling Generally, it is said that you should refinance your home if the low interest rate more than 2 percent. This is because the refinance has the same closing costs (fees to originate the loan, prepaid interest, etc.) than the original loan. With less than 2% difference, saving on your monthly payment may be less than it costs to refinance. 

Saving vs. Time when Refinance Homes

For some homeowners the 2% rule is not so important that the time required to recover the money spent on refinancing. For example, if it costs $ 3000 to refinance a home and low monthly payment $ 90, would require almost 3 years to cover the cost savings of refinancing. If you are staying at home more than 3 years if - worth refinancing. 

If all information (title research, land surveyor plan, etc.) still serves its original loan, the lender can reduce many of the costs. Also, sometimes you may include refinancing costs on the new loan. In this way still you have to pay the expenses, but with time with the rest of the loan. If you consider this option, calculate the potential savings vs. the cost of paying a higher balance on the principal. Another factor to consider is that generally refinance gets longer time to pay the house completely. 

If the refinance after 3 years ago on a 30 year mortgage, and your new loan is also a 30-year mortgage, the result would be 33 years to pay off the house completely (if not make extra payments). But if saving is enough, it could leave paying less during the life of the loan. To avoid this problem, you can also consider the option of the new loan is 15 years. 

The savings on the monthly payment may be less with this option, but will pay much less in interest over the life of the loan when refinance homes. Adjustable rate mortgages (ARM) Finding the right time to refinance may influence whether to change an adjustable rate mortgage to a fixed rate. For example, if the interest rate has been low and it appears that will go up, this can influence you to convert your adjustable rate loan fixed rate one, especially if you plan to stay in the house for many years. On the other hand, if you only plan to stay at home one or two years and if you find a lender willing to give significant savings with an ARM loan, you may consider switching from a fixed rate mortgage to an adjustable, especially if expenses closure are minimal. 

Equity Refinancing does not mean you have to lose all the money you have already paid on the original mortgage. With each monthly payment is increasing its equity in the house - that is the amount paid on the principal of the loan (excluding interest). For example, if you have a $ 100,000 mortgage at 8%, increase by about $ 2800 of equity in the first 3 years. In this case, if you want to refinance, the principal of the new loan would only be $ 97.200. 

Using equity loans to get money for other things - be careful If you have a lot of equity in your home, it can sometimes refinaciar to use that money for other things. Some people do it to pay off credit cards with high interest rate, to remodel the house to pay the bills dentist, or to send a child to college. Some lenders allow you to pay the equity you have in the house, plus the appreciation of the house (sometimes up to 75% of the current value). These loans are called loans home equity. But be careful, especially if the lender offers equity loans 100% or 125%. Many times the interest rate is higher than traditional lenders, and interest on the borrowed amount, which is more than market value, you can not deduct in the form of personal income taxes. Also, if you have to sell the house, you have to repay all loans, not just the original mortgage. And if the loans are worth more than the selling price of the house, you have to pay the difference when closing instead of taking money from the business. 

Talk to your lender 

With all types of refinance homes available today, it is worth talking with several lenders to find out all your options. You should discuss the costs and benefits, in addition to the duties on his behalf. The more you report, the more likely you find the best plan for you.