Sign In | Sign Up | Help | Invite    
Advanced Search Ask A Question Community Recent Changes
My:             Contributions   
Contributors
{for ul in pageInfo.page}
${ul.nickName}
{var al = toBreakWord(ul.adUrl,18)} {if ul.adSentence !=''}${ul.adSentence}
{/if} {if ul.adUrl !=''}${al}
{/if}
 
{/for}
Earn Free Advertising   +   Earn Money By Writing What You Know at WISTEME.COM
Question Discussion History

Edit
    Question ID:   19380         Current Version: 1
Question: Why do I need to consider refinancing?
Category: Business & Finance > Renting & Real Estate
Keywords: consider, benefit, mortgage loan, refinancing, refinance
Type: why
Rating:(0 ratings)    Views: 71    Discussions: 0   In Watch Lists: 1  

 
    Answer:
Lowering your interest rate

The interest rate on your mortgage is tied directly to how much you pay on your mortgage each month--lower rates usually mean lower payments. You may be able to get a lower rate because of changes in the market conditions or because your credit score has improved. A lower interest rate also may allow you to build equity in your home more quickly.

Adjusting the length of your mortgage
  • Increase the term of your mortgage: You may want a mortgage with a longer term to reduce the amount that you pay each month. However, this will also increase the length of time you will make mortgage payments and the total amount that you end up paying toward interest.
  • Decrease the term of your mortgage: Shorter-term mortgages--for example, a 15-year mortgage instead of a 30-year mortgage--generally have lower interest rates. Plus, you pay off your loan sooner, further reducing your total interest costs. The trade-off is that your monthly payments usually are higher because you are paying more of the principal each month.
Changing from an adjustable-rate mortgage to a fixed-rate mortgage

If you have an adjustable-rate mortgage, or ARM, your monthly payments will change as the interest rate changes. With this kind of mortgage, your payments could increase or decrease.

You may find yourself uncomfortable with the prospect that your mortgage payments could go up. In this case, you may want to consider switching to a fixed-rate mortgage to give yourself some peace of mind by having a steady interest rate and monthly payment. You also might prefer a fixed-rate mortgage if you think interest rates will be increasing in the future.

Getting an ARM with better terms

If you currently have an ARM, will the next interest rate adjustment increase your monthly payments substantially? You may choose to refinance to get another ARM with better terms. For example, the new loan may start out at a lower interest rate. Or the new loan may offer smaller interest rate adjustments or lower payment caps, which means that the interest rate cannot exceed a certain amount.

Getting cash out from the equity built up in your home

Home equity is the dollar-value difference between the balance you owe on your mortgage and the value of your property. When you refinance for an amount greater than what you owe on your home, you can receive the difference in a cash payment (this is called a cash-out refinancing). You might choose to do this, for example, if you need cash to make home improvements or pay for a child's education.

Remember, though, that when you take out equity, you own less of your home. It will take time to build your equity back up. This means that if you need to sell your home, you will not put as much money in your pocket after the sale.

If you are considering a cash-out refinancing, think about other alternatives as well. You could shop for a home equity loan or home equity line of credit instead. Compare a home equity loan with a cash-out refinancing to see which is a better deal for you.

Source: Federal Reserve Board
Read more questions from WISTEME through
     Add to MSN Add to My AOL
 Rate this Question
   Add to Groups   Add to Watch Lists   Share Question
                          
 
    More Readings :
[QID:19400]    What is "no-cost" refinancing?  
[QID:19382]    Am I eligible to refinance?  
[QID:19381]    When is refinancing not a good idea?  
[QID:19401]    How can you shop for your new loan?  
[QID:19399]    What will mortgage loan refinancing cost?  
[QID:1579]    What are whole and refined grains? What's so great about grains?  
[QID:14136]    What are the benefits of an FHA loan?  
[QID:3665]    What is crude oil refinery?  
[QID:1885]    What foods are in the grain group?  
[QID:4299]    What are the basics about mortgage rates?  
     Question ID:  ${question.id}         Current Version:  ${question.version}

{for qh in questionHistory} {if qh.status == 'r'} {else} {/if} {/for}
Version Contributor Date (ET) Voting
${qh.version} ${qh.nickName} ${qh.date} Rejected
${qh.version} ${qh.nickName} ${qh.date} {if qh.status != 'c'} {if qh.status == 'a'} Approved {else} {if qh.rstatus == 'c'} On-going {else} Pending {/if} {/if} {else}   {/if}
Start a New Topic
ID Topics Replies Latest Post (ET)
{if dlist!=null} {for d in dlist} {/for}
${parseInt(d_index)+1} ${d.sentence} ${d.replyNum} ${d.lastestDate}
{else}
No discussion topic.
{/if}
Label Name:
 
Group Name:
 
 
{else}
     You have no group.
{/if}
Advertisements
{if advertisements.length > 0} {else} {/if}
{for ad in advertisements}
${ad.adTitle}
${ad.adSentence}
${ad.adUrl}
{/for}

Home | About Us | Terms of Use | Privacy Policy | Browse Questions | RSS Feed

Copyright ©2010 WISTEME LLC. All Rights Reserved.