Home Loan Refinancing–Points to Consider Before Getting One
March 25, 2009 by admin
Filed under Home Loan Refinance
Statistics shows that home refinancing in the United States has been increasing in recent years.
One of the reasons why home owners refinance their homes is to lower their interest rates on the mortgage. Some other reasons include cashing home equity, reducing monthly payments, building home equity much faster, etc. Whether or not to refinance mortgage loan is a big decision that families should discuss thoroughly. Here are some points to ponder on before making that crucial resolution.
Rising Interest Rates
Some home owners come to a realization that they need to switch to an interest loan that is more or less fixed when interest rates are likely to go up. In getting a fixed mortgage payment plan, you need not worry anymore about future increases in your mortgage payments.
Monthly Budget Strain
Refinancing home loan is one of the ways to decrease monthly payments. Despite having a fixed rate, people still want to refinance home loans so that they could extend the loan’s term, especially during the times they experience difficulties in making their monthly payments.
The Stress Caused
Most people are initially attracted to adjustable rate mortgages since they are usually lower than the fixed-rate loan. However, some people aren’t aware that adjustable-rate mortgages are adjusted every year. Thus, when interest rates rise, monthly payments correspondingly increase.
Improved Credit Rating
Upon applying for a mortgage, many people have very little credit history initially. In fact, some may even have had unpleasant borrowing records. Everything in your credit standing, good or bad, is taken into account by the lender in calculating your mortgage’s interest rate. Refinancing home loans help improve your credit score and likewise, help you qualify you for a better rate as well.
In considering whether refinancing home loans is right for you or not, one should consider many factors. Put simply, you need to calculate your every decision when it comes to refinancing.
