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Blue Mountain MortgageRefinancing a Home
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Mortgage Rates* 30-Year Fixed 6.375% Jumbo Fixed 6.875% ARM 6.125%
*Rates subject to change without notice
Last Updated Monday, December 03, 2007 |
Asheville Real EstateRefinancing a Home
Blue Mountain Mortgage* is
committed to building life-long relationships
Refinancing is when a person applies for a mortgage loan on a house and/or property to pay off an existing mortgage on the same house/property. Many people believe the best time to refinance is when interest rates are at least 2% lower than the current interest rate on your home. Even if the rates haven't dropped that much, taking the time to calculate potential savings is time well spent.
Blue Mountain Mortgage* specialists will tell you there are many reasons why a homeowner chooses to refinance their home, some of which are discussed below. |
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Tips for .... Refinancing a Home
*Blue Mountain Mortgage is registered with the North Carolina Commissioner of Banks and is licensed to conduct mortgage brokering business.
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There are many reasons why refinancing is a good idea. What better way to have extra cash in hand, while lowering your monthly mortgage payments in the process, than to refinance your house. Owning a house can certainly be an asset, provided you know and understand the benefits of refinancing. Listed below are some of the primary reasons why refinancing, and ultimately saving money, might be a good idea.
Foreclosure is basically when you find yourself no longer able to make your monthly mortgage payments to your lender. The lender, in turn, can come in and take your home when you can no longer keep that promise of making your loan payments. There are a number of scenarios that result in foreclosure. You could have lost your job or may have had to take on additional financial burdens.
By refinancing your house, you might be able to save your house and prevent foreclosure. However, keep in mind that the interest rates and closing costs on a "foreclosure prevention loan" can be very high. A typical rule of thumb for this type of loan requires a homeowner have at least 30% equity in the home. Ask your mortgage broker for help with your available options.
Debt consolidation is self-explanatory. By refinancing your house, you can take advantage of the equity you have built up in your home. That equity is much like cash in your hand and can be used to pay down or consolidate your debt. Be wary, however, of depleting the equity in your home!
One of the most common ways to avoid rate increases is to obtain a fixed mortgage rate when buying, selling, or refinancing your house. A fixed mortgage makes the most sense for those who plan to stay put for a while. By obtaining a fixed mortgage rate, you ensure a consistent monthly payment for the life of the loan.
Another way to avoid rate increases is to take advantage of an adjustable rate mortgage. These ARMs are most beneficial to people who are planning to move or relocate in the next 5-10 years. Initially, ARMs have lower interest rates to than fixed rates. By taking advantage of an adjustable rate mortgage, you can make plans to either sell or refinance at exactly the point when you plan to move.
One way to save money when refinancing your home is to obtain a mortgage for a shorter length of time. You can switch from a 30-year mortgage to a 10, 15, or 20-year loan, thus saving you valuable money on interest paid. Keep in mind, however, by shortening the life of the loan, you will no doubt increase your monthly payments. Check your finances to see if you can handle an increased monthly mortgage payment.
Another great way to save money refinancing your house is by keeping a close eye on the interest rates. When the Federal Reserve begins to cut mortgage interest rates, which is currently taking place, the newer rates may very well be lower than your current interest rate. This may indeed be the best time to refinance your home, lowering your monthly payments and ultimately saving you money.
Eliminate PMI (Private Mortgage Insurance) Private Mortgage Insurance is something that is required when a home buyer does not make at least a 20% down payment when purchasing a house. If you have paid on your house for a few years, and the house has increased in value over those years, you may very well have enough equity built up to refinance the house and pay the 20% down payment. If you do, then PMI would be eliminated, therefore saving you money.
Another way to take advantage of the built up equity in your home is to take out a "Cash-out" Refinancing loan. Basically you take out a new loan which is higher than the principal balance on your current loan, and pocket the cash. You could use this "extra income" in a number of ways. You could pay off high-interest credit card bills, remodel your house, or even pay for school tuition.
► Making Verbal Agreements ► Lock rate not in writing ► Waiting too long to shop for home insurance ► Signing documents without reading them |
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