Thursday, October 30, 2008

Mortgage Refinancing - Refinance

Mortgage Refinancing - Refinance
By George Baddour

When you think about mortgage refinancing, your main objective has to be saving on your monthly mortgage payment, so the most important reason to refinance is to get a lower interest rate.

If you have a high rate, it is important to follow up with interest rates news. A just drop of half or three quarters of a percentage point can lower your monthly payment.

If you don’t refinance, you’ll be paying thousands of dollars after just couple of years.If you know how long you plan to stay in the home, and if it is a short period like two years for example, it is wise to get an ARM loan that is usually lower than fix rate.

However before refinancing, you should ask yourself how much points will I pay to lower my monthly payment? If you are planning to stay a long time in the house, it might make sense to pay for points.

But if you plan to move shortly, it will not be keen to refinance. For taking the right decision, it’s worth to calculate it right!Cash Out Loans are great for people who will benefit from the money in a reasonable way like paying college tuition, expensive surgery operations or investing in business, real estate or in any lucrative project.

Interest rates are generally the same as what you pay on a mortgage where you don’t take cash out, except of paying additional fees that vary depending on the LTV (Loan To Value).In Interest Payment Only you have the option to pay only the interest on your loan or both the principle and the interest.

Refinancing to an interest payment only is a good move as you can have some cash in your hand every single month, but Watch it! You’ll still owe the mortgage company. However if that cash flow is spent on other investment, it will be a great step.

Some of these investments are: Increase your home value by home improvements, pay down high-interest credit card debt, save for your children college tuition and of course the choice is yours, you might be buying a newer economical car to save on gas and/or repair expenses

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