Loan Refinance Home Mortgage
Are you thinking of a loan refinance? It’s that time of year when the bills are mounting up and you want to spend even more money. You don’t have it so what do you do? First of all, you put all your cards on the table; literally. Sit down and make a list of your assets. Do you have any? You might also want to make a list of your debts. Sit down with your husband/wife, your significant other, parents or whoever helps you pay your bills for this conversation. Don’t have anyone else helping out with the finances? Then it is totally up to you.
First, before anything else, list the reasons for a loan refinance of your home.
• To bring down your interest rate
• To cash out equity
• To remodel or update your home
• Pay off existing bills
• Buy gifts, take a trip, spend money you don’t have
• Because you got a divorce or your significant other died
• To send your child to college
Now, it’s time to get down to business.
• List your weekly or monthly salary
• List your monthly bills and due dates
• List your assets: car, home, vacation condo, boat, RV, jewelry (gold, silver, gems)
• List your extra income such as 2nd or 3rd jobs, abilities to make money(foreign language tutoring for example)
• List people who might be willing to loan you money
• List your credit cards
• Available credit
• Cash advances available amounts
• Difference between what is owed and what you have available to borrow
After you have made all these lists of reasons my you want a home loan refinace, you should read and re-read them until the information is stuck in your brain. Then be certain you have all your current mortgage information at your fingertips. Do you have an adjustable mortgage or a fixed rate mortgage? What is your rate? How many times/year does your rate change and when is your next rate change due? Are you satisfied with your current mortgage company? Do you want to do a home loan refinance through this same company? If so, the next step is to call your mortgage advisor at that company and discuss what the current rate is and what you will have to do to get your new mortgage fast.
You will need to ask what fees will be added into the amount you are hoping to get by doing a loan refinance. In these tough financial times, you will probably have to have your property reappraised by someone recommended by the mortgage company. This will add from $200-$1000 to the amount of your new loan. Will you have to have an additional amount of insurance on your home? Will the new mortgage have any specific restrictions that you have not had to consider before?
Ask about the difference with a fixed rate mortgage. Although you will be locked into a rate, you will not have to worry about it changing during the length of your mortgage loan refinance. With an adjustable rate mortgage, the rate changes periodically based on the market rates at that time. This means that they can be adjusted upward or downward. This is basically a gamble on your part because no one knows what is going to happen in the financial atmosphere we find ourselves in today.
You have to decide if you will be living in or owning your home long enough to pay off the loan. If you don’t see yourself keeping the property then you have to consider whether or not you will lose your investment once you have to sell. If this mortgage is going to be for at least 80% or more of the value, the mortgage company may want you to add additional assets to the loan papers. The alternative to this would be for the company to require you to purchase additional mortgage insurance. This will make your payment higher.
If you are refinancing to pay off a debt, you must steel yourself so that you do not run up any additional debts. Cut up your credit cards and store cards so that you will not be tempted to spend, spend, spend and find yourself in the same mess all over again.
Then ask yourself these loan refinance questions.
• Do I have enough equity to refinance?
• Can I lock in a lower rate and lower payment?
• How is my credit score? Is it high enough?
• What are the closing costs and how much am I willing to pay?
• Do I want fixed interest or Adjustable Rate?
• Do I want a 15 or 30 year term?
Sometimes you just have to weigh all the pros and cons and ask yourself “Is it worth it to a loan refinance?”