Mortgage Refinance: Refinancing to a lower rate
MORTGAGE REFINANCE trends over the past five years have been a part of historically low interest rates helping American home owners to save money.
As rates begin to go back up, many wrongly believe they have missed the boat for locking in a low rate. However, interest rates remain lower than they have ever been in the past 20 years.
Refinancing your mortgage is a also a good opportunity for what is known as debt consolidation. If you have high interest payments every month on things such as credit card debt, you can roll these debts into your new mortgage when you refinance.
As a part of this site's online services to help you with your loan needs we feature a refinance calculator that can estimate what is called your "break-even date." If you input your figures correctly, this date indicates the amount of time you must remain in your home to break even on your refinance closing costs (fees). After your break-even date, you save money on your mortgage payments every month as a result of refinancing today.
Mortgage Refinance for a larger amount than your original loan
The time you decide to refinance may be a good time for you to take out some additional money for home improvements or to cover other expenses. In so doing, you can add to the value of you home or borrow at a low rate of interest to send your kids to college.
An important factor in this decision is the tax status of the interest you will pay on your new loan. This status depends on how the money is used. If your cash is used for home improvements, for example, the interest payments are tax deduction. Refinancing is typically a great option if you intend to stay in your house for at least a few more years; however, make careful considerations of the tax issues involved with taking out a larger loan in the process. A qualified mortgage broker can help work out these figures with you.
Common Questions:
1 Rates have already gone up, why mortgage refinance?
If you have had improvements in your credit since you acquired your loan you may qualify for a better rate based upon your improved credit worthiness. Even if rates have made jumps, you may still be able to lock in at a lower rate when you refinance your mortgage.
2 I did a mortgage refinance last year, should I do it again?
Only a qualified mortgage broker professional can give you a firm answer. If you would like to estimate the benefits of refinancing today, try our free online mortgage refinance calculator and make a guess at your new rate of interest for the calculation. If you would like a rate quote for your refinance, our application will put you in touch with competitive mortgage refinance quotes.
3 How do I know if my mortgage refinance will pay off?
Once again this is a question answered by a refinancing calculator that will estimate your break-even date. If you stay in your home until the break-even date, every month after that month's payment will result in savings you would have otherwise lost out on.