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Refinancing



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REFINANCING GUIDE
You can save a great deal of money by refinancing your mortgage. The information below will help you decide if now is the best time for you to refinance your home loan.

 

What is reason for refinancing?
  - To achieve lower interest rates - Interest rates are still very low. If you can lower your interest rate by at least 2%, you should refinance to save money and lower payments.
  - To covert your loan into a better one - For example, if you have an ARM (adjustable rate mortgage), you should consider a fixed rate loan (FRM). A fixed rate mortgage will allow you to lock-in your interest rate for a long period of time. In addition, you will likely reduce your monthly payment when you refinance to a lower loan with a fixed rate.
  - To eliminate having to make a balloon payment -  It is common for some mortgages to require a large payment at the conclusion of the loan. You can avoid having to make this balloon payment by refinancing your loan.
  - To eliminate PMI (private mortgage insurance) payments - If you borrow more than 80% of your home's value, you will have to pay private mortgage insurance. If the value of your home has increased, you can refinance and use the increased net value to refinance and stop paying PMI.
  - To get cash out of the equity from your home - You can use the equity from your home to pay for a vacation, home improvements, college, etc.. If the value of your home has increased, you can get the extra amount in cash by refinancing. Learn more about cash-out refinancing. We also feature tips on building equity.
  - To consolidate debts - High interest credit cards and loans can be consolidated into your mortgage when you refinance. Learn more about refinancing to consolidate debt.

** If you are unhappy with your home's assessment, you can learn how to fight an assessment.

What is your current financial state?
  - My finances and credit have improved - If your credit score and rating have gotten better since when you first applied for your mortgage, you can likelys reduce your interest rates by refinancing. If your financial state has improved, i.e. reduced or eliminated debt, increased income and/or savings, you can likely achieve a lower interest rate by refinancing.
  - My finances and credit have not changed - If this is the case, it is less clear whether or not you will save money by refinancing.
  - My finances and credit have gotten worse - An inferior credit score will likely mean you will not be able to qualify for a lower interest rate.

Further educate yourself regarding how your credit effects mortgages. Also, learn what you can do to rebuild your credit.

How much will it cost you to refinance?
Our refinance calculator will help you figure out if refinancing is a good idea. Even though lower interest rate will result in lower payments, you need to consider the closing cost fees. If the money saved in monthly payments are more than the closing costs, refinancing is smart decision.

 

Other reasons why refinancing would be a bad decision:
  - Are you planning on moving? - It will take about a year to pay off the closing cost fees and to start reaping the benefits of your new loan. If you are considering moving before you can earn your money back, you need to think twice before refinancing.
  - Does your current loan have a pre-payment penalty? - It is not uncommon for lenders to add a prepayment penalty to your mortgage. These penalties are expensive and are usually enforced if you sell or refinance your home within 1-5 years from the time your mortgage has been in place.
  - How much do you owe on your current home loan? - If you are close to settling your mortgage, it will likely make more sense to wait and pay-down your loan than to refinance. When you refinance, you extend the term of your loan. This will result in you paying much more in interest costs over the life of the new loan.
  - Do you have financial issues?  - Any type of mortgage loan is secured with your home. If you are looking to refinance to consolidate debt, but you have financial problems, refinancing may not be a good idea. Dealing with financial issues is very hard, making it difficult for you to pay your mortgage, you can end up losing your home to foreclosure. Learn what you can do to help prevent foreclosure.

Apply now for a no obligation refinance quote without having your credit checked!



        

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