Analyze the best conditions when Refinancing your Home Mortgage
Refinancing your home mortgage is an option very common today, and this because there is nothing better for any family in distress your bank accepts the possibility of solving the problem of unpaid before it reaches the dreaded eviction .
Since a citizen fails to pay a mortgage payment until you actually kicked out of your home may take many months, in which they can propose alternatives to avoid foreclosure. Until recently, most of the financial institutions chose to start the eviction process. But after the adoption of the Code of Good Banking Practices, the attitude of banks has changed.
He explains Carlos Baños, president of the Association of People Affected by Foreclosures and Auctions (Afes), who indicates that code "has meant a shift lever." "Banks are beginning to show other softer attitude with the citizens," explains the expert.
Individual negotiation when you choose refinancing your home Mortgage
It is best to negotiate directly with the bank and avoid "generic solutions, because each case is different," explains Carlos Baños. President Afes indicates that, just now, "are entering default rates mortgages that had problems two years ago and managed to qualify for refinancing some extent." This problem reappears because many of the holders of those loans agreed to, for example, a temporary reduction of quotas, among other measures. That is, short-term solutions that act as a "boomerang" after a few years, as in these cases.
When a family is in an untenable situation, you can request a restructuring of its debt to the bank. At present, most of the institutions offer three solutions: the extension of the loan term with respect to the initially agreed; applying an interest grace period, usually two years; or the regrouping of all mortgaged debts into a single loan. These three solutions are not beneficial for all citizens.
Before opting for any of them at the time of refinancing your home mortgage, you should analyze the conditions that your bank offers and determine which is best for you short, medium and long term.
More time and interest when refinancing your home mortgage
One of the measures most commonly used by banks when modify the terms of a debt is an extension of the loan term. The longer the duration, the lower the monthly payments, although in the end, more interest will be paid.
"We must avoid aggressive refinancing with parameters that we are normal," advises Carlos Baños. "You can not take such a prolonged debt that do not allow to maintain a normal rhythm of life 'impact. "At first, it may be attractive, but two or three years the family budget becomes the limit," explains the president of Afes.
Another possibility posed by financial institutions is to perform a grouping of debts reunite into a single loan the mortgage payments, personal loans, consumer cards, etc. "It seems a good measure because it is able to reduce the total amount of all fees paid," explains Carlos Baños. However, from the Association of Users of Banks and Savings Banks (Adicae), "we must be aware that, for practical purposes, amounts to an extension of the term of the debt, so you pay a lot more interest." Before signing the reunification, it is necessary to "know much is the resulting tax and make sure you can assume" recommend from Adicae.
The third way in which entities choose to solve the problem of defaults is to design a new system of repayment, with grace periods or increasing quotas. The danger involved lack (assumes the absence of payment of interest for a while) is that once the measure is completed, the mortgage holder will be, possibly, with a considerable increase in the share in which, until then only he was paying the outstanding capital.
Covenants in writing
When you decide to opt to refinancing your home mortgage once accepted any refinancing of these tools, it is advisable that loan holders demand formalize these changes in writing, because so have the assurance contained in a public document, "explains Adriana Hibernón. Of course, keep in mind that usually in such cases, it is the citizen who should bear the costs of this procedure.
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