Home Equity Loan ? When Does Refinancing Make Sense?
For the last two years, interest rates have been much lower than anytime during the last thirty years. This has resulted in an unprecedented boom in real estate sales, home refinancing and home equity lending, as borrowers try to take advantage of these rates for the long term. But refinancing or even borrowing against your home's equity may not make sense for everyone. When is it a good idea to refinance your home? When is it not advisable? Traditionally, lenders advised homeowners not to refinance unless doing so would lower the interest rate on the loan by 1-2%. While anyone who can save 2% on their interest rate would almost certainly benefit from doing so, others might find refinancing worthwhile even with a smaller reduction in the interest rate.
Increased competition among lenders has brought the costs of refinancing down in recent years, so homeowners can realize a significant reduction in their home payments with reductions of ?% or so, depending on the size of their mortgage. The key to whether or not refinancing makes sense is how long the homeowner intends to remain in his or her home. The costs of the refinancing, which can run $1000-2000, are amortized over the life of the loan. For many people, a reduction of $50 or more in the house payment would be more than enough to justify a new mortgage. If payments cannot be reduced by at least that much, or if the homeowner plans to live in the home only a short while, refinancing may not be a good option.
Refinancing may also make sense for those with Adjustable Rate Mortgages (ARMs.) At the moment, at 30-year fixed-rate mortgage is quite competitive with an ARM, and may actually be cheaper. With rates at historic lows, an ARM can only adjust upward, making it a less desirable choice in comparison with a fixed-rate loan. Anyone considering a home remodeling project or debt consolidation might ordinarily think of a home equity loan or line of credit. These are often wise choices, as they offer deductible interest and great repayment flexibility. On the other hand, a chance to obtain a 30-year loan at 5% might make a complete refinancing with a cash-out option a better choice, as home equity rates are somewhat higher than first mortgages.
A new mortgage might also make sense for anyone with a second mortgage or a piggyback loan. A piggyback loan is a second loan used at the time of a home's purchase to help the buyer avoid paying the sometimes-expensive private mortgage insurance. Simultaneous payments on two mortgages will be higher than paying on one, so this might be a great time to roll them together on a refinance. The same applies to anyone carrying a large credit card balance; that money could be rolled into a home loan with deductible interest at a lower rate. Anyone considering such a move should be careful, however, as failure to repay that debt could lead to home foreclosure.
Now is a great time for any homeowner to consider whether or not a new mortgage could help lower their payments. With interest rates as low as they are now, the timing is great, and there's nowhere for the rates to go but up..
?Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a site devoted to debt consolidation and credit counseling, and HomeEquityHelp.com, a site devoted to information regarding mortgages and home equity lending .Atlanta Home Mortgages
When purchasing a new home in Atlanta, a buyer should consider the mortgage interest rate and his own financial capability. Then he should think about the lending period of the home mortgage. Generally in the case of a fixed rate mortgage, where the rate of interest stays the same, the time span ranges between 15 years to 30 years.
If the borrower goes for long-term loan, obviously his interest payment will be higher. However, he can avoid that without reducing the initial size of the mortgage through higher monthly payments of the principle amount. But higher monthly installments reduce the flexibility of the borrower.
To avoid this he may opt to pay one extra monthly payment every year.
The borrower may also choose an adjustable rate home mortgage in which interest rates fluctuate with market interest rates. The interest rates of such mortgages will be lower when compared to those of fixed rate mortgages. In such a mortgage, the borrower pays lower...
Mortgages > Atlanta Home Mortgages
Buying a Home? Website helps Homebuyers Save Thousands by Researching Available Home Buying Grants before Making an Offer to Buy a Home
(ContentDesk) May 21, 2004 -- Buying a home is probably the single most important financial transaction one makes. As home prices continue to climb, it becomes more important for perspective home buyers to research available mortgage programs that best fit their particular need before making an offer to buy a home. Now researching mortgages and learning about the home buying process has been consolidated into a single resource. Home buyers can simplify the home buying process by taking a few recommended steps. First, get familiar with the home buying process.
This will help you understand what to expect and help you deal with any issues before you are emotionally involved in buying a home. Buying-a-Home-Info.com provides an easy to read step by step outline of what to expect when buying a home.Secondly, after getting familiar with the home buying process, begin researching available home buying grants and mortgages by visiting:
Buying a Home? Website helps Homebuyers Save Thousands by Researching Available Home Buying Grants before Making an Offer to Buy a Home
Mortgages > Buying a Home? Website helps Homebuyers Save Thousands by Researching Available Home Buying Grants before Making an Offer to Buy a Home
What is a Current Account Mortgage?
Current account mortgages are fairly new to the sector. They are quite different to other types of mortgage as they enable you to set off all your savings and debts in one single account. Several lenders offer this type of flexible mortgage that is linked to a current account, and is called a current account mortgage. Your mortgage account and your bank account are merged into one and you are issued with a cheque book and cash card just as you would with an ordinary current account. You pay your salary into the account and a proportion is automatically used to meet your monthly mortgage repayment.
You can pay as much off your mortgage as and when you like, according to monthly minimums set by the mortgage lender. You can also use your savings to put against your mortgage, paying the mortgage off more quickly and reducing interest payments. A current account mortgage allows you to run a current account against the mortgage allowing any money in the current account to offset against...
What is a Current Account Mortgage?
Mortgages > What is a Current Account Mortgage?
What is a Flexible Mortgage?
'Flexible mortgage' is a term that's used a lot, but what exactly does it mean? A flexible mortgage allows the borrower to make extra repayments when they have the extra money and even reduce or skip payments should the need arise. A flexible mortgage allows you to make extra payments to reduce the amount outstanding on your mortgage thereby reducing the interest you're paying or pay off your mortgage earlier than planned. Imagine being able to save money in mortgage interest, or borrowing enough money pay off your credit cards or personal loans, or buy a new car at a low rate of interest. That's exactly what flexible mortgages enable you to do. Flexible mortgages allow you to save money by cutting the length of your mortgage term.
You can also buy yourself more time when money is tight by reducing your monthly repayments or increase you mortgage if you need to borrow money. 'Flexible mortgages', also known as 'Australian mortgages' are fast becoming the most popular way of taking...
What is a Flexible Mortgage?
Mortgages > What is a Flexible Mortgage?
Buying a Home? Website helps Homebuyers Save Thousands by Researching Available Home Buying Grants before Making an Offer to Buy a Home
(ContentDesk) May 21, 2004 -- Buying a home is probably the single most important financial transaction one makes. As home prices continue to climb, it becomes more important for perspective home buyers to research available mortgage programs that best fit their particular need before making an offer to buy a home. Now researching mortgages and learning about the home buying process has been consolidated into a single resource. Home buyers can simplify the home buying process by taking a few recommended steps. First, get familiar with the home buying process.
This will help you understand what to expect and help you deal with any issues before you are emotionally involved in buying a home. Buying-a-Home-Info.com provides an easy to read step by step outline of what to expect when buying a home.Secondly, after getting familiar with the home buying process, begin researching available home buying grants and mortgages by visiting:
Buying a Home? Website helps Homebuyers Save Thousands by Researching Available Home Buying Grants before Making an Offer to Buy a Home
Mortgages > Buying a Home? Website helps Homebuyers Save Thousands by Researching Available Home Buying Grants before Making an Offer to Buy a Home
Home Equity Mortgages
Home equity mortgages are loans that use the equity on the home as collateral. Home equity is the difference between the current value of the home and the amount owed because of the mortgage/mortgages. A home equity mortgage can also be said to be a second mortgage since the extra cash generated can be used for home improvements, thus increasing the value of the house further.
Like regular home mortgages, home equity mortgages also use the property/ home as the security.
In case of default, the lender has the right to take over the home.
There are many advantages of taking a home equity loan: it would reduce the current loan burden if taken at a lower rate; the funds generated can be used to pay off high interest debts like credit cards; sometimes, home equity mortgages enable some tax savings; they can be used to exchange the present mortgage for a shorter term mortgage. Other advantages include: lower closing costs, and faster closing.
Home...
Mortgages > Home Equity Mortgages
What you need to know about mortgages
Business stuff can be downright confusing especially when confronted with rates, numbers and the banking jargon that seem alien language to you. Still, you do not really have much choice as loans, interest rates and mortgages are words that you can either understand and study or risk losing the roof over your head.
What is a mortgage?
Mortgages is a legal and binding contract that indicates that you have agreed to use your house as security for a loan made. Upon signature, the lender will hold the title deed of the property until after you pay all the money that you owed plus interest. If in case, you are not able to make mortgage payments, the lender has the right to sell the property.
What are mortgage payments
To make it easier for you, the lender will give you opportunities to pay your loan in installment. Some will ask for a down payment, which is a lump sum that you have to pay in order to reduce the amount of money that you have to...
Mortgages > What you need to know about mortgages
California Mortgage Refinancing
A Mortgage is a long-term loan for a large amount, commonly taken for a property or a house. It is a kind of home loan except that it is termed for longer. Mortgages are available through a bank, private lenders, or property sellers. Unlike personal and home loans provided by banks and financial institutions, long term mortgages stretch for up to 50 years at a time, while the usual mortgages last for as long as 30 years. The minimum duration for a Mortgage is 15 years.
A Mortgage is given on the property that is kept as a collateral security. This is the reason why the short-term mortgages are more popular that the long-term mortgages with the money-lenders. As the property value decreases with age, so does the value of the security. 15- 30 years is the best tenure when land is being kept as a security for a Mortgage, unless the land is in its prime at the time of mortgaging the same. Although mortgages can be extended at the sole discretion of the lender, the borrower...
Mortgages > California Mortgage Refinancing
Mortgages
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