Mortgage rates as of mid 2019 have been nearing a one-year low. This has made some homeowners consider refinancing their homes. A refinance seems straightforward, but this isn’t always the case. Sometimes even a better interest rate could not be a good enough reason to refinance your home. Before making the change, take a look at some of the best and worst reasons to refinance your home.
Best: Low Interest Rate
This of course is the chief reason to refinance a home. Homeowners that still have many years left on their mortgage might want to consider refinancing. This is especially the case if someone wants to shorter a 30-year mortgage to a 10 or 15-year mortgage. Shorter-term mortgages generally have lower interest rates.
Best: Consolidate High-Interest Debt
A cash-out refinance is used to help with cash flow and save money in the long run. The issue with this type of refinance is that you won’t be able to deduct the mortgage interest paid on the cash out that is more than the current loan balance if the funds aren’t used to build, purchase, or significantly improve upon your home.
Pro: Say Goodbye To Mortgage Insurance
Many are unaware that a home loan can lower the costs associated with a private mortgage insurance. In particular such a change can be made if the loan in question is a Federal Housing Administration or FHA.
Worst: Save Money For New Home
Refinancing sounds good at first. But that’s before you realize all the other costs associated with the process. Most refinancing closing costs amount to 2%. Such a percentage may not be paid off until years down the road. This is why someone considering moving within a few years of refinancing might as well not go through the trouble of doing so.
Worst: Spend Big With A Cash-Out Refinance
Homeowners strapped for cash may think that tapping their home for money is their best option. However refinancing to receive cash from your home will only serve to put you in even bigger debt that you’re already in. A cash-out option should only be used in the most dire of circumstances.
Worst: Protracting The Term
Making your way past the 15-year milestone of a loan is a major accomplishment. Deciding to refinance 15 years into a 30-year mortgage means that in a sense you’ll start the process over again. Most mortgage payments begin by only paying back the interest. After 15 years you’re finally beginning to pay back the principal. With refinancing, you’ll be amortizing from the beginning again.
Worst: You Just Bought Your Home
Lenders will love your choice to refinance shorty after having signed a mortgage. Refinance fees could prove to be too much for some borrowers. The terms provided in the early years of a mortgage should be manageable enough to deter you from refinancing.
To contact a lender you can put your trust in, get in touch with Affiliated Mortgage. This Rapid City has been helping communities across the USA secure mortgages that suit them for more than 30 years.
Mortgage rates as of mid 2019 have been nearing a one-year low. This has made some homeowners consider refinancing their homes. A refinance seems straightforward, but this isn’t always the case. Sometimes even a better interest rate could not be a good enough reason to refinance your home. Before making the change, take a look at some of the best and worst reasons to refinance your home.
Best: Low Interest Rate
This of course is the chief reason to refinance a home. Homeowners that still have many years left on their mortgage might want to consider refinancing. This is especially the case if someone wants to shorter a 30-year mortgage to a 10 or 15-year mortgage. Shorter-term mortgages generally have lower interest rates.
Best: Consolidate High-Interest Debt
A cash-out refinance is used to help with cash flow and save money in the long run. The issue with this type of refinance is that you won’t be able to deduct the mortgage interest paid on the cash out that is more than the current loan balance if the funds aren’t used to build, purchase, or significantly improve upon your home.
Pro: Say Goodbye To Mortgage Insurance
Many are unaware that a home loan can lower the costs associated with a private mortgage insurance. In particular such a change can be made if the loan in question is a Federal Housing Administration or FHA.
Worst: Save Money For New Home
Refinancing sounds good at first. But that’s before you realize all the other costs associated with the process. Most refinancing closing costs amount to 2%. Such a percentage may not be paid off until years down the road. This is why someone considering moving within a few years of refinancing might as well not go through the trouble of doing so.
Worst: Spend Big With A Cash-Out Refinance
Homeowners strapped for cash may think that tapping their home for money is their best option. However refinancing to receive cash from your home will only serve to put you in even bigger debt that you’re already in. A cash-out option should only be used in the most dire of circumstances.
Worst: Protracting The Term
Making your way past the 15-year milestone of a loan is a major accomplishment. Deciding to refinance 15 years into a 30-year mortgage means that in a sense you’ll start the process over again. Most mortgage payments begin by only paying back the interest. After 15 years you’re finally beginning to pay back the principal. With refinancing, you’ll be amortizing from the beginning again.
Worst: You Just Bought Your Home
Lenders will love your choice to refinance shorty after having signed a mortgage. Refinance fees could prove to be too much for some borrowers. The terms provided in the early years of a mortgage should be manageable enough to deter you from refinancing.
To contact a lender you can put your trust in, get in touch with Affiliated Mortgage. This Rapid City has been helping communities across the USA secure mortgages that suit them for more than 30 years.
A Little About Affiliated Mortgage
A Little About Affiliated Mortgage
© 2019 Affiliated Mortgage, LLC. NMLS #14211: AZ NMLS#0947858. All Rights Reserved. Affiliated Mortgage, LLC is a Division of Lend Smart Mortgage NMLS #4474
Developed and designed by https://blairallenagency.com
The post The Best And Worst Reasons To Refinance Your Mortgage appeared first on Affiliated Mortgage.
No comments:
Post a Comment