Why consider a home mortgage refinance loan?
There are specific reasons to consider a home mortgage refinance loan. The most powerful reason among them is the requirement to reduce monthly payments by opting for a lower interest loan. If you get a new lower APR by at least two points, or 0.5%, you may be eligible for a home mortgage refinance loan. Refinancing is not a free affair, it involves expenses such as home reassessment, attorney fees and loan application fees; They can all add up to $500 or $750. Then again, this amount is considerably less compared to the hundreds of dollars you save each month for ten to twenty years.
Another reason may be to switch to the security of fixed rate loans, especially when you feel there is a chance your adjustable rate mortgage will go up in the near future, say less than a year. This is a good preemptive move, to stay afloat in changing financial conditions.
Another, less compelling reason for a home mortgage refinance loan is home improvement or the purchase of a new lifestyle product on the market. If adding ambience to your life is the only requirement for a home mortgage refinance, you’re more likely to find yourself on the losing end. The current interest rates you are switching to may be higher than your original rate.
Giving your home equity as collateral may also be necessary for conditions such as your children’s education or other unavoidable circumstances. At those times, getting the equity in your home will be the best option to obtain a loan at a low price.
A good move in home mortgage refinancing will be to consult a lender other than your existing loan provider, or at least suggest to your lender that they consider refinancing your mortgage. Since you are an existing customer, your refinancing request is more likely to take a backseat. However, with a change in lender, you may get faster processing of your mortgage refinance application. On the other hand, you can get a lower interest loan from your current financier. The point here is that you have more options. If you have been consistent in paying your monthly debt on time, the existing lender may bypass another credit check and a reassessment of your home or property.
Copyright © 2006 Joel Teo. All rights reserved. (You may republish this article in its entirety with the following author information with live links only.)