Home loan refinancing is hot stuff these days. Not only is it being touted as a way to salvage property ownership in times of economic crunch, it's also now seen as a way to save. While homeowners are growing more conscientious with their finances, lenders and promoters of various refinance products are also becoming more creative with their presentation. While this is not necessarily a bad thing, you might want to keep a few sensible things in mind as you shop for home loan refinance products.
The first thing to remember is that if something sounds too good to actually be true, then it also most likely is. When home loans are involved then you will not find anything for free and that means you always have to read the fine print and ask all questions you may have. Nothing beats doing your research and looking to find where the catch is, because there is always going to be one and it just won't be obvious. If you do find an offer that seems alright no matter how you look at it, then check out the background of your lender. This is important, because there are too many companies that lure you into a financial trap.
The second thing to remember is if they tell you "no cost refinance" don't believe it. What is often the case is that your lender may cover the refinance charge for you but be sure that it will show up elsewhere. Also remember that no cost refinancing mortgages tend to have higher rates than the market rate.
The third thing to understand is to make sure you actually understand what "no-cash" mortgage is. For certain it does not mean no- cost. You may very well have a no-cash mortgage but the cost ends up added onto your principal loan and you end up paying more since you have the principal loan plus closing costs added to that and interest that is applicable.
Whether a person is looking at refinancing to restructure debt or to pay off their mortgage faster they want the one that will save them money, understandably. Read on for information on three strategies.
Refinancing your mortgage to a shorter term dramatically reduces your interest costs. You make larger principal payments each month; ergo you have a smaller base to compute interest on the next month.
Additionally, rates are lower on short-term home loans, higher on longer-term loans. This is perhaps a sensible approach because everything is newly cut clean. You know how much is what and when. Whether this is economically sound depends on the related closing costs.
An alternative approach is similar to the recommended strategy for paying off credit card debt: pay more than the minimum. Whether you make double payments on your mortgage, send in an extra 10% every month or just send in your tax refund, bonus check or any unexpected cash inflow for extra principal payment, these add up and save you years in mortgage payment. Bottom line, if you would want to become debt free sooner than expected, prepaying your mortgage is a great way to do that. - 31387
The first thing to remember is that if something sounds too good to actually be true, then it also most likely is. When home loans are involved then you will not find anything for free and that means you always have to read the fine print and ask all questions you may have. Nothing beats doing your research and looking to find where the catch is, because there is always going to be one and it just won't be obvious. If you do find an offer that seems alright no matter how you look at it, then check out the background of your lender. This is important, because there are too many companies that lure you into a financial trap.
The second thing to remember is if they tell you "no cost refinance" don't believe it. What is often the case is that your lender may cover the refinance charge for you but be sure that it will show up elsewhere. Also remember that no cost refinancing mortgages tend to have higher rates than the market rate.
The third thing to understand is to make sure you actually understand what "no-cash" mortgage is. For certain it does not mean no- cost. You may very well have a no-cash mortgage but the cost ends up added onto your principal loan and you end up paying more since you have the principal loan plus closing costs added to that and interest that is applicable.
Whether a person is looking at refinancing to restructure debt or to pay off their mortgage faster they want the one that will save them money, understandably. Read on for information on three strategies.
Refinancing your mortgage to a shorter term dramatically reduces your interest costs. You make larger principal payments each month; ergo you have a smaller base to compute interest on the next month.
Additionally, rates are lower on short-term home loans, higher on longer-term loans. This is perhaps a sensible approach because everything is newly cut clean. You know how much is what and when. Whether this is economically sound depends on the related closing costs.
An alternative approach is similar to the recommended strategy for paying off credit card debt: pay more than the minimum. Whether you make double payments on your mortgage, send in an extra 10% every month or just send in your tax refund, bonus check or any unexpected cash inflow for extra principal payment, these add up and save you years in mortgage payment. Bottom line, if you would want to become debt free sooner than expected, prepaying your mortgage is a great way to do that. - 31387
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