If
you current mortgage loan is on the higher side, you can consider the idea of
refinancing it with a lower rate of interest, and other better terms and
conditions. If you plan well and get a good refinancing deal, you could well
end up saving thousands of dollars on your mortgage. This is especially true
for those homeowners who are insecure because they have an Adjustable-Rate
Mortgage (ARM). There are certain terms and conditions that a homeowner has to
fulfill to qualify for a refinancing option. A good credit score is one of the
most important prerequisites for qualifying for a refinance.
A number of people take the decision of refinancing mortgages to cut down on their monthly installments. A high monthly payment can easily be reduced if the refinancer offers favorable terms and conditions. The following example will elucidate how refinancing a mortgage can help in reducing your monthly payments.
Joe had taken a $200,000 mortgage loan in 2010. The rate of interest was 4.5% and the term was 15 years. According to the agreement, Joe had to make a monthly payment of $1,560 towards the home loan. In March 2014, Joe refinanced his mortgage with another financial institution. He arrived at this decision after taking into account the fact he could do better with a lower monthly payment. According to the new mortgage plan, Joe gets a 30-year term at 5%, bringing his monthly payment down to $1,074. One important thing to remember is that although Joe might pay lesser every month, he pays more over the course of the loan. He will also have to pay additional charges, such as appraisal fees, refinance fees, etc.
There are still a lot of benefits of refinancing a mortgage; let us take a look at them.
Change in Mortgage Plan
Refinancing a mortgage gives homeowners the option of changing their mortgage plan. Sometimes, many homeowners are stuck with an ARM mortgage that has high interest rates. Refinancing a mortgage can give homeowners an opportunity of switching from an ARM mortgage to a fixed mortgage. Also, homeowners who want to extend or reduce their loan term can also do it by refinancing their mortgage.
A number of people take the decision of refinancing mortgages to cut down on their monthly installments. A high monthly payment can easily be reduced if the refinancer offers favorable terms and conditions. The following example will elucidate how refinancing a mortgage can help in reducing your monthly payments.
Joe had taken a $200,000 mortgage loan in 2010. The rate of interest was 4.5% and the term was 15 years. According to the agreement, Joe had to make a monthly payment of $1,560 towards the home loan. In March 2014, Joe refinanced his mortgage with another financial institution. He arrived at this decision after taking into account the fact he could do better with a lower monthly payment. According to the new mortgage plan, Joe gets a 30-year term at 5%, bringing his monthly payment down to $1,074. One important thing to remember is that although Joe might pay lesser every month, he pays more over the course of the loan. He will also have to pay additional charges, such as appraisal fees, refinance fees, etc.
There are still a lot of benefits of refinancing a mortgage; let us take a look at them.
Change in Mortgage Plan
Refinancing a mortgage gives homeowners the option of changing their mortgage plan. Sometimes, many homeowners are stuck with an ARM mortgage that has high interest rates. Refinancing a mortgage can give homeowners an opportunity of switching from an ARM mortgage to a fixed mortgage. Also, homeowners who want to extend or reduce their loan term can also do it by refinancing their mortgage.
No comments:
Post a Comment