Refinance Mortgage-Factors to Consider
Mortgage refinance essentially
involves securing a new loan to repay an existing mortgage loan.
This is usually done when it is possible to secure the second
loan under more favorable terms than the original mortgage loan.
These more favorable terms can lead to a host of benefits for
the property owner which may include lower monthly payments,
the ability to utilize the existing equity in the home and the
ability to repay more of the principle loan and less in interest
Is Now the Right Time for Refinance Mortgage?
Considering a refinance mortgage may be a good idea in a number
of different scenarios. Some of the factors or changes which
might make it a good idea to consider refinancing your mortgage
• Improved credit scores
• Lower interest rates
• The need to use the existing equity in the home
Property owners who have credit scores which are higher than
they were when the original loan was acquired might want to
consider the option of refinancing their mortgage. This is significant
because lenders typically reserve their most favorable loan
terms for those with high credit scores. Lenders consider those
with high credit scores to be less of a risk and often reward
these homeowners with better interest rates.
Anytime that interest rates are lowered it is wise to consider
the option of refinancing your mortgage. Lower interest rates
can lead to a significant cost savings over the course of the
loan making it certainly worthwhile to investigate this option.
Care should be taken to ensure the new interest rate will be
low enough to offset the closing costs for the new loan. There
are mortgage refinance calculators readily available on the
Internet to help you determine if refinancing will be financially
beneficial. As long as the total savings resulting from the
refinanced mortgage exceeds the closing costs and other fees
associated with securing the loan it is advantageous to pursue
the option of mortgage refinancing.
Finally refinancing your mortgage may be a good idea when the
homeowner wants to take the opportunity to utilize the existing
equity in their home. There are cash out options for mortgage
refinancing options which enable the homeowner to utilize the
equity for any purpose they wish. This may include home improvements,
education or even starting a business. One way to do this is
through a home equity line of credit where funds are made available
to the homeowner but not disbursed until requested. There is
typically a borrow period where the homeowner has the ability
to draw upon these available funds.