Why Refinance?

Refinancing Can Help You To Get Your Payments Lowered.

When rates are low it's the time to think about refinancing. Its only common sense to want to cut your payments and save money, and when rates are low it is the perfect time to look into this possibility to see if it suits your current needs.

By refinancing, getting a new first mortgage that will pay off the old one, and most probably getting better terms and saving thousands of dollars in the long run, this is an option that warrants the time and research to determine if it does, in fact, suit you.

If you have recently taken out a thirty-year FMR, fixed rate loan, for $150,000 at 8.5% and are being offered a new loan, also for thirty-years, but at 7%, your monthly payments will drop by $155 monthly. The over-all savings over the term of the loan will be almost $42,000. So you see, it should be well within your interest to investigate and keep yourself up-to-date on all the current rates and how you can best take advantage of refinancing.

Three Other Very Good Reasons For Refinancing:

1. Do You Have A High-rate Second Mortgage Debt? If that is the case you can refinance both your first mortgage and second mortgage into a new lower-rate first mortgage. By going through a cash-out refinancing, or a refinancing in which the new first mortgage is larger than the old one you may get a better deal than the one you now have. Then you will get the difference between the old loan balance and the new one at closing, to spend as you need to
   
   
2. Do You Now Face A Considerably Large Expense That Your Current Cash Flow Will Not Allow For? If you are worried about being able to make the larger payments associated with a higher-rated second mortgage, and do not wish to enter into an equity loan agreement for a much needed home improvement, school tuition or other costly item, than refinancing can help you to achieve your goals. By not taking out a separate equity loan, and choosing to simply refinance your first mortgage and then take cash out at closing to pay whatever you need the cash for, you can satisfy your immediate financial needs and not upset your monthly budget constraints too much.
   
   
3. Do You Wish To Shorten The Term And Lower The Interest Rates Associated With Your Current Loan? A few years ago you may not have been able to secure a fifteen-year mortgage because of its higher interest rates and payments, but now, due to current economic conditions, it is an option. You should seriously consider refinancing your thirty-year agreement to do just that, cut your total interest and build equity all at the same time, and get fifteen-year terms.

Who Should Possibly Forgo A Refinancing?

1. If You Have Already Been Paying In For More Than Just A Few Years You Need To Fully Examine Refinancing Before You Take The Plunge. You need to calculate if refinancing will keep your loan on the books for so long that, overall, you end up paying much more in interest than you might think you will be saving. Thirty-five to forty years is a long time to be under the onus of a mortgage and it can hinder you in making other investments in the long term.
   
   
2. Anyone Who Has Damaged Their Credit Since First Getting Into Their Current Loan Agreement May Not Qualify For The Best Of Rates Now. Have you been delinquent on mortgage or credit card payments? Was a vehicle repossessed or have a few checks bounced over the years? Have you changed jobs or been downsized? If your credit rating or ability to earn has suffered you may actually be quoted higher rates than you are currently paying and you will be prohibited from taking full advantage of refinancing at this time. You are now considered to be a much higher risk than before.
   
   
3. If You Qualify For An Equity Loan Or Line Of credit You May Be Better Off With One Of These Choices. Equity loans and lines of credit cost less, and unlike first mortgages may not have closing costs associated with them. If the prime rate is exceptionally low now, you do not need too much money for your current needs and you know that you can repay the prospective loan quickly, this may be a much better alternative to refinancing.

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