subject: Can You Save Money Refinancing Your Mortgage Now And What Are The Key Points To Ponder . [print this page] Mortgage home refinance is an idea that you should be contemplating with interest rates at decade lows.. One cannot speculate were interest rates will be in six months or even a year. Chances are on the side that interest rates will gradually rise in the future, but when no one is certain despite the continued weakness in the housing market. So now may be a good time to start considering refinancing one home specially if you have any variation of adjustable type debt that is set to reset sometime in the near future.
When considering a mortgage home refinance you should consider the following points:
Current Mortgage rates The rate of interest between the current loan you have and the new loan should be at least 1%. This interest differential is were mortgage home refinance starts become logical, more than 2% differential, then its a no brainer.
Type of Loan The type of loan is very principal, adjustable rate mortgages of various varieties reset and put you at greater risk of having your monthly payment go up significantly. This will give you the opportunity to roll into a fixed rate mortgage so you will not have to worry about increasing mortgage payments in the future.
Equity If you have at least 20% equity in your home, then refinancing will allow you to get rid of Private Mortgage Insurance (PMI). Eliminating this insurance can possibly save you anywhere from $70 to $150 a month.
Credit Score If your debt to income ratio is reaching the maximum. Your credit score can increase if you do a mortgage home refinance and your resulting payment that is lower. Lowering your debt to income ratio will help improve your credit.
How long have you been in your home? If you have owned your current home is also a issue, older loans will have monthly payments applied to principal in increasing amounts whereas newer loans more is applied to interest. If you are facing a one time large expense such as college tuition, medical bills, or something of that nature. The refinancing and pulling some cash from your equity might make sense. This is a sound idea because other ways of borrowing have higher interest rates and therefor cost.
Using equity from mortgage home refinance is also and valuable debt consolidation tool to effectively reduce the minimum monthly payments on debt and save a substantial amount of money on credit card debt.
The cost involved in refinancing must be included when making a decision if mortgage home refinance is for you. Take the time or get professional advice to consider if refinancing makes sense in your case and carefully consider cost savings.
There are many variations in which can be carried out and it could potentially save you considerable amount of money over the duration of the life of the loan.
by: Ian Master
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