The Home Mortgage Place

The Biggist Investment in Your Life

When to Refinance Mortgage

If you are one of those homeowners who has the question circling in your head about when to refinance his/her mortgage then keep reading because you will get a better idea when you want to go ahead and apply for a home mortgage refinance.

What it means to refinance? Refinancing your home mortgage means you are receiving a new mortgage on your home. So whatever steps you went through as a first- time home mortgage buyer, you will most likely go through them again. So the question is…

When to Refinance Mortgage…

-If you can get an interest rate that is lower than what you currently have. How much lower? At least 1.10 percent or higher.

-You are planning to stay at least another 4 to 5 years in your house to the make the refinance worthwhile.

-Because there are fees attached to the refinance process, you want to make sure you will be able to cover these new costs.

-Is your mortgage monthly payment reduced or not? With a lower interest rate it should be.

-Are you in a financial crisis? If you are, it can soon ruin your credit history profile and you may think refinancing is not justifiable.

With the above factors, find out if your lender will penalize you by paying off your first mortgage through the refinance before the due date or maturity date. This is called the prepayment penalty.

Advantages of Refinancing

Lower Monthly Mortgage Payment

When you refinance your first mortgage with a lower interest rate the monthly payment for the new loan usually goes lower. That way you can save more money to use for other personal expenses.

Building up Equity

Depending on the period of your refinancing, the sooner you pay off the loan the faster you will build equity. And in that case you will probably have the same or higher monthly payment.

Consolidating Your Debt

Putting all your loans in one place is much better, safer, and most likely cheaper assuming you obtained a lower interest rate. Paying off monthly loans here and there can lead to the following:

-While paying off one loan at a time, you might be missing a payment due date with another

-Credit cards loans usually have high interest rates so consolidating them under one bank with much lower a interest rate is the way to go.

Having Extra Cash Money

Many banks or lenders are willing to refinance you with more money than what you owe for your mortgage. So the extra money can be used for personal use, business purposes, or just paying off a high interest charge on credit cards.