If you think it might be time to consider a mortgage loan refinance, the information here should help you make the final decision. There could be many things to consider, but these five questions are among the most important considerations.
Has the Value of My Home Increased? You can get an idea about the value of your home by looking at what similar homes in your neighborhood are selling for.
To get an exact figure, you will need to have an appraisal. If the value of your home has increased, you may qualify for a home equity loan. You may be able to roll the home equity loan in with the mortgage refinance in order to get one monthly payment.
Do I Need Cash for Home Improvements? While you can use the cash from a home equity loan for anything you like, many people use the money for home improvements. Generally speaking, the interest rates for loans secured by your home are lower than what you would get from a credit card company or from personal non-secured loans. So, you save money in the long run.
Can I Get A Lower Interest Rate? If you don’t have any equity or you simply don’t need the extra cash, refinancing is a smart idea when interest rates have gone down. Depending on when you bought your home, you may be able to get a much lower rate than you did initially. A lower interest rate could save you thousands of dollars over the course of the mortgage length. Your credit standing can affect the interest charged by the bank. The higher your credit standing, the better your rate will be. If you don’t know what your credit rating is, it’s relatively easy for the bank to check.
Will My Monthly Payments Change? If you can’t get a better interest rate, you might be able to get lower monthly payments by extending the length of your mortgage. If you originally financed for 20 years and you wanted to refinance for 30 years, for example, your monthly payments would be lower. That can be helpful if your financial status has changed.
What Are the Mortgage Loan Refinance Costs? The mortgage loan refinance costs are similar to the closing costs you paid when you bought your home. Some banks will roll some of the costs into the total amount of the loan, allowing the costs to be spread out over time. But, some things, such as an appraisal, will have to be paid for up front. Closing costs vary. It’s important to find out how much they will be before you refinance.
By Martin Fisher