efinancing can be a great refinancing? What are your plans
money saving tool for for your home or real estate?
homeowners, or it can be
the wrong thing at the wrong This background knowledge will
time. Last year, according the help in several ways. If you plan
Mortgage Bankers Association, to move within the next three
Americans refinanced to the tune years, or if the difference in
of $1.17 trillion dollars. The interest rates in less that 1.5%,
rising cost of fixed rate then refinancing might not pay
mortgages drove that to a mere off right now. Remember, once you
$938 million this year. That’s refinance you need time to recoup
still a huge number of people who the closing costs you have
choose to refinance their homes invested. However, if you have a
or commercial mortgages. Here are variable rate that is climbing,
some guidelines to help you or a significantly higher fixed
decide if this is the right time rate, refinancing may offer you
for you to refinance. some appealing options.
What to Know Before You Refinance Why People Refinance
You need to be able to answer People refinance for different
some basic questions about your reasons. In many cases, the
home or real estate investment decision to refinance can help to
before you can make a wise reduce your monthly payments and
decision about the best time to interest, or reduce the life of
refinance. For instance, what is your loan and the principle owed.
your current interest rate? Is it Others obtain a cash-out closing
fixed or variable? Is your home’s to make home improvements or pay
value increasing? Can you afford off consumer and credit card
the closing costs associated with debt. This method usually doesn’t
lower your payments. increasing both the life and
principle balance of your loan
Before You Decide to Refinance amount. This is a short-term fix
that can have long-term
But before you jump into a consequences.
decision to refinance, be aware What Can Help
that there are costs involved.
Closing costs and points will To help get the lowest interest
affect how much money you must rate when you refinance you can
pay up front to refinance. A do one of two things. Put as much
point is equal to 1% of the total money as you can down upfront, or
amount of your loan. You should use that money to pay off
expect to pay 2-3% in points when consumer credit card debt. Since
you refinance. Just like when you your interest rate and the amount
purchased your home or real you can borrow are tied to your
estate investment, the more money credit score, it can save you
you put down, the lower your money to improve your rating
interest rate is likely to be. before you refinance.
There are instances where you can
get a no-cost closeout, and these And don’t forget to shop around.
are ideal, but not always You will find a lot of lenders
available. willing to work with you, and
mortgage rate calculators are
A word of caution; if you find available on many real estate
yourself refinancing yearly to websites. A little homework now
pay off debt, you’re not doing will save you a lot of money
yourself any favors. In this later.
situation you are probably
About the Author:
John Harris is a researcher and writer on applicable real estate topics such as economics, credit improvement tips, home selling advice and home buying preparations. For more information please visit San Diego Realtors
Read more articles by:
John Harris
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