Four Possible Reasons To Refinance

A mortgage is generally the largest debt most homeowners have to manage.  It’s a good idea to give your personal real estate finance portfolio a check-up at least once a year.

Since there are many reasons a homeowner may choose to refinance, we’ll take a look at the four most common.

1.  Mortgage Rates Drop:

Typically, the most common reason that homeowners refinance their mortgage is to secure a lower interest rate. Interest rate and loan amount determines the total cost that a borrower will pay. The lower the interest rate, the less the overall cost will be. Interest is calculated on a daily basis and usually paid back to the lender on a monthly basis.

2.  Lower Payments:

Lowering a mortgage payment can be achieved by lowering the mortgage rate, lengthening the loan term, combining two or more loans or removing mortgage insurance.

3.  New Mortgage Program:

Refinancing an Adjustable Rate Mortgage (ARM) to a new Fixed Rate Mortgage (FRM), combining a first and second mortgage or paying off a balloon loan are three possible reasons to explore a refinance.

4.  Debt Consolidation:

If there is sufficient equity, sometimes paying off consumer debt by combining all debts into one lower monthly mortgage payment can significantly reduce the short-term deficits in a budget.  However, it’s important to keep in mind the total cost of that debt by adding it into a 30 year mortgage payment.

_________________

Frequently Asked Refinance Questions:

Q:  Do I have to refinance with my current mortgage company?

No, you may choose any company to refinance your mortgage since the new loan will replace the existing mortgage.

Q:  Is it easier to refinance with my current mortgage company?

It is possible your current mortgage company may require less documentation, but this could add additional cost or a higher interest rate. Do your homework and shop around to make sure you’re getting the best deal.

Q:  Will I automatically qualify if I’ve never made any late payments?

No, you will have to qualify for your new refinance. However, certain programs will allow for reduced documentation like a FHA to FHA Streamline Refinance.

_________________________________

Related Article – Refinance Process:

January 31, 2010 by · Leave a Comment

Related Posts

About Carolyn

To give you a little bit about myself I am a veteran of the Real Estate profession. I have been in the mortgage industry for over 20 years, been a licensed Real Estate Professional and am a home owner myself. I have a true understanding of all sides of a purchase transaction and know the importance of communication to all parties to make the deal close. I started my financial career in Seattle with Washington Mutual back in 1991 and have continued to grow in the industry through various aspects of the business. I have had the honor of being on Congressman Bill Posey's Financial Roundtable in 2010 and in 2011. I have been an Underwriter, processor as well as a Mortgage Loan Originator. At Certified Mortgage Planners we have the unique ability to broker our loans as well as a direct lend. What this means for you is we have multiple options to choose from and are a full service lender which allows us to help our clients fit in the best possible financing . My greatest satisfaction in my career is helping people in our community achieve homeownership, whether it is their 1st home, their last home or investment and helping my Realtor partners achieve there goals. What is also important to me is treating people fairly and ethically. I work with people in all price ranges and no matter what the objective is and will be there from start to finish. I feel truly blessed to be a part of such a great business and enjoy the challenges that it sometimes brings.

Leave a Comment