| Refinancing... The Right Choice? |
For most people today, refinancing often makes good sense. Why?
For many people, today's mortgage rates are much lower than the
rates they're currently paying. If this is your situation, your may
be able to save a substantial amount of money by refinancing
your home loan.
There are other good reasons to refinance. If you have a home
equity loan or line of credit, there's a good chance you're paying a
credit card debts, you could possibly be paying up to 23%. And,
you're not able to deduct the credit card interest from your
income taxes!
If this sounds like your situation, refinancing your home may
be a perfect solution to help reduce your monthly payments.
You could literally save hundreds of dollars every month by
consolidating your bills into one easy monthly payment.
Another great reason you might want to refinance has to do with
you and your family's future. Refinancing your existing loan can
give you the cash you need to take advantage of the ever-growing
up swing in the stock market, start your retirement portfolio, or
investigate stock in other investment programs where your money
can work for you.
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| Should I refinance my existing loan now? |
your existing mortgage. You need to ask some important questions:
How much lower should my interest rate be for refinancing to make
sense?, Can I Qualify for a lower rate?
In the past, the decision to refinance was usually based on balancing
the cost of refinancing with the possibly savings in the form of a
lower monthly payment. Now, lenders offer "no cost" or "low cost"
loan packages that sound good on the surface, but you end up
paying for it in the form of a higher interest rate. These programs
were designed to eliminate of lower the out-of-pocket expenses
previously associated with refinancing your home loan.
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| Will a "no cost" or "low cost" loan work for me? |
decide to move in for a few years, the monthly savings you might
obtain by refinancing your home is not worth it. On the other hand
, a "no cost" or "low cost" loan might save you money in the long
run.
The longer you plan to stay in your home, the more sense a "no
cost" or low cost" loan will make. Compare different loan programs
to determine which will benefit you most. If you don't think you
will stay for many years in the home you live in now, but you would
like to consolidate your bills or lower your interest rate, you might
take a look at the advantages of an Adjustable Rate Mortgage
(ARM).
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| How will I know how long it will take to recoup the cost of my loan? |
the loan program you've chosen. These rates, and the term (how
many months) of your loan will determine our new monthly
payments. Subtract the new monthly payment from your old
monthly payment. For example, $980. (Your old payment)
minus $720.00 (your new payment)=$260.00 per month savings.
Now, let's say it costs you $2,500.00 for all of your loan costs and
fees. Divide $2,500.00 by $260.00 to find out how many months it
will take you to recoup the costs of your loan. In this case, you will
have your new loan for a little over 9 1/2 months before you will
break even.
The good news is that from then on, you will save $3,120.00 every
year. And if you have 30 year loan and stay in your home for all of
the 30 years, you will have saved$93,600.00 on the price of your
home.
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