Benefits Of Refinancing Your Home Mortgage

By opting for home mortgage refinance, I have improved my financial life and made it more convenient. If you too want to know how then read on

What is Home Mortgage Refinance?

If you are confused about difference between home mortgage refinance and home mortgage, then the fine line of difference among them is that with a new home loan, you pay off your existing home loan.

Now the benefits derived by me by refinancing are

Benefits of Re-financing

  1. I received the refinance loan at less interest rate. Hence, the monthly payment for my home loan decreased. For getting loan at lower rate, they checked my credit score.
  2. When I had taken the loan for the first time, I had not concentrated on the loan structure, that is the fixed and the flexible rates. However, with time I found that the fixed rate is expiring and I needed something better.
  3. Another advantage that I got from home mortgage refinance is that I have reduced the total number of repayment years. Earlier it was 23 years. I had paid for 6 years and then refinance the loan for 12 years. So I can hopefully complete the repayment within 18 years of talking the loan. Hence, by refinancing I am able to reduce the total number of years by 5 years.

Tips For Refinancing Your Property

Me and my husband use to earn and based upon that we had taken a home loan. We were bearing the interest regularly along with premium for our car insurance, health insurance, life insurance and home insurance. But after my child birth I had to leave my work and now I am a home manager. The problem that we faced is that our monthly income reduced and we had to curtail various expenses. In such a situation we thought of mortgage refinance, so that we can get better interest rates and also save some money from the EMI paid by us. However, when we started our home refinancing, we make sure that we followed the following tips

Right time to refinance the mortgage

There is different cost associated with refinancing, and it is not free. Hence, you should have plans for staying in the home for long enough so that you can save money. Like, if your refinance charges are $2400, and you are saving $200 per month, and then make sure you are there for at least a year to save money.

Find the right broker

You must take time to find the right broker as a good broker would not only give you different options but also help you reduce the mortgage rates. If you cannot find the right broker, then you may miss out many good options for refinancing.

Know the basics about your loan.

It is a must to know about the basics of your loan. Like know what would be the interest rate of the loan and make sure that it is fixed. However, if the rate changes take it into consideration and make sure that you decide after considering all the alternatives.

Keep your life situation in mind at all times.

Finally, whether to refinance or not must be decided based upon your present life situation. How much is your present earning and whether you are able to get enough to repay your loans, if it is such that presently you are unemployed then it is always advisable not to spend your savings in refinancing cost. Remember, that refinance is for reducing your problems not increasing them.

Research Your Mortgage Refinance Options

As a home owner, you too like us may think that refinancing would give you more savings monthly and you can also get other benefits from home mortgage refinance. Hence, while refinancing, always make sure that you are considering all the aspect most diligently. Always try to consult a financial planner as they can suggest you better than your friends or relatives. They have the expertise to understand the situation and suggest you accordingly.

Before you finalize discuss with different brokers about the refinancing and find out what each of them are offering. Try to choose a broker who offers you the best deal and would work for you with honesty. If you can choose the right broker and a good financial plan then just enjoy because hopefully you can handle the entire situation.

Usual Closing Costs For Mortgage Refinancing

When getting a mortgage you have to be aware of potential hidden costs.

If you are unaware of the term ‘home mortgage refinance’, as I used to be then please go through this article to know certain basic things about it. Like, when we go for taking loan again for the home and with it repay the existing loan, we say that the home mortgage is refinanced. However, when we go for refinancing there are certain costs which we have to bear. They are as follows

Application Fee

A fee is charged to cover up the different administrative costs. It ranges from $250 to $800. Many people call it as ‘junk fees’ too. And as a borrower you can request the lender for waiving off this fee. In many cases this fees is waived too. Hence, as a borrower this would be your savings

Processing fee

Another fee that can be waived off by the lender is processing fees. It ranges from $500 to $750 and it charged to pay off the processor of the loan. There are many lenders who waive this off without even any request from the borrower. Even many banks floats offer when they waive off this processing fees.

Origination fee

To compensate the bank or lender, from where your mortgage loan originated, this fee is paid. It can be negotiated and finalised. However, a common practice is to hold 1% of the loan amount granted by the bank. For those whose originating lender would close at $500000, the originating fees would be $5000. The rate which decodes the originating fees can be 1% or lower, however it cannot rise above 2%of the total loan amount.

Discount fee

The discount fee is paid keeping in mind the end goal to bring down the month to month interest rate forced on your credit by method for prepaying interest no less than 1% of the principle amount. Henceforth, if your refinanced credit is $200,000, you will be obliged to pay $2,000 speaking to interest paid ahead of time; this in fact brings down your interest rate. In the event that the interest rate of the advance is 8.5% and the vital is $200,000 payable inside 30 years, the bank’s equal table of reckoning is a month to month amortization of $1,502.53/month for chief and interest. Upon installment of the $2,000 rebate, which is, in fact interest paid ahead of time, your month to month amortization gets to be $1,484.99/month, coming about to the bringing down of your interest rate at 8.125%.

Title Insurance Fee

Title insurance will be obliged to ensure the interest of the mortgage company concerning conceivable misfortunes that may emerge in the title of the property. The sum may change relying on the credit amount, region, and state. This is ordinarily 0.5% of the obtained total amount. On the off chance that on the off chance that the mortgage organization possesses the insurance business, request a revelation about the insurance fee.

Evaluation Fee

This will take care of the expense in deciding the reasonable business sector estimation of the property in the event that it will fit the bill for the advance. This may go from $300 to $500.

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Reasons For Getting Your Home Refinanced

I was paying off interest on my home loan since last five years when my friend suggested that why I do not choose home mortgage refinance. I was a bit confused, however, he cited me various reasons for refinancing. They are 

Reduction in Interest rate

Interest rate of the mortgage decides the amount that I have to pay every month to complete my loan repayment. Hence, if thee interest rate is reduced then the payment for each month would reduce, resulting in increase in net cash in my hand every month. If you compare properly you can find that in ten years tenure you can save a lot.

Get chance to adjust the term of your mortgage

When I go for home mortgage refinance, I get the chance to adjust the payment term of the loan as per my convenience. Either I can increase the tem or decrease it too, depending upon my financial condition and future planning. If I increase the payment terms I have to bear more interest, but the monthly payment would reduce. Similarly, if I decrease the tem then monthly payment would increase but the total interest that I pay would decrease.

Option to change the interest rate from flexible to fixed or vice versa

If I choose refinancing my mortgage then I get the opportunity to change the flexible interest rate to fixed rate and then I would not have to bear the extra interest if by any chance the market rate changes and the rate of interest get higher. With fixed rate of interest I can be assured that for the coming say 10 years or 15 years I have to pay this amount monthly for repayment of my home loan.

Thus, as my friend cited me the reasons for choosing home mortgage refinance, I decided to go for it.