WHEN IS IT RIGHT TO REFINANCE?
With "everyone" talking about the historically low mortgage rates you are ready to decide if it "pays" to refinance. The "rule of thumb" supplied by mortgage companies is that if you can reduce your interest rate by 1% it is usually profitable. But there is more to it than that. Like how long are you planning on staying in the house? Realistically, the first thing you need to determine is what rates do you qualify for and what are the other costs (like points and closing costs). When refinancing it is common to roll the additional costs and fees back into the mortgage so there are no "out of pocket" costs.
But this allows the Bank or other mortgage holder to charge you interest on these fees. At the current low interest rates and if you choose a short time period for your mortgage the additional interest will be relatively small.But even at these low rates, if you have a 30 year mortgage, interest will end up doubling the amount of fees over the 30 year life of the loan. Assume you took a 30 year, $115,000 First mortgage on a house 5 years ago. The interest rate at the time was 7.5% and your principal and interest payment was $765.10 per month. (If $765.10 sounds low to you, remember your "actual payment" may also include mortgage insurance, taxes and home owners insurance.)After paying $765.10 per month or $9181.20/year for 5 years you have spent a total of $45,906.
Plus, you still owe about $108,000 on your $115,000 mortgage and you still have 25 more years to go! Not much of your payment is going toward principal! So the sooner you can get out from under the better.Recently interest rates have fallen to around 5% so you consider refinancing. Assuming Closing Costs, fees and expenses are about $3,000. you will have to "borrow" $111,000. to pay off your $108,000. loan (or come up with the $3,000.) from savings.If you decide to refinance the additional costs for another 30 years...
your loan amount would be $111,000. and you would be almost back to where you started 5 years ago... but your payment would drop to $595.87 for a monthly savings of $169.23Although it might be nice to have an additional $169.23 to spend each month, the question is what will you do with the money? Go out to eat more, buy more toys? Invest it in your retirement fund? Or just "blow it"? If you just "blow it"... all you have accomplished is that you are in debt to the bank for an additional 5 years. Not a happy prospect...What if you set the mortgage term to 25 years? In that case, your payment would be $648.89 saving you $116.21 per month.
So for an additional $53.02 per month your mortgage term remained the same.Personally, I think that is a better solution. At least you aren't pushing your retirement out an additional 5 years while you continue paying your mortgage.Remember, the original question was... Is it worth it to refinance and pay the additional $3000. or just keep paying on the old mortgage?Keep in mind, as soon as you sign the papers the equity you have in your house drops by $3000! Assuming you chose the 25 year mortgage (with the $116.21/mo savings) it will take you 25.8 months to break even ($3000/$116.21) because at that point you will have saved the $3000. it cost you to refinance.
So if you intend to stay in your house 3 or more years it would pay for you to refinance.But what if you took it one step further? What if you kept your payment the same and reduced the term of your mortgage as far as possible? A $111,000 mortgage at 5% with a payment of about $765 would require a term of 223 months or about 18.5 years. Assuming you could get an 18.5 year mortgage and you intended to stay in your house that long, this would be an excellent move! You have drastically reduced the amount of money you will pay the bank over the life of the mortgage and you are free and clear 6.5 years earlier! Even if you move sooner, your equity will be building faster so you will have more money when you sell.Unfortunately, lenders do not usually let you choose an odd term length like 18.5 years , so you would have to choose either a 20 year term with a payment of $732.55 which would still save you about $30/month but also knock 5 years off your loan (and build equity somewhat faster).Or you could choose a 15 year term with a payment of $877.78 which would actually cost you about $110/month more than what you are currently paying but would knock a full 10 years off your mortgage. If your income has risen since you got your initial mortgage and you could swing it... it would be money well spent. For those with higher incomes who have difficulty saving, this is a great idea because it actually forces you to save a little bit more each month and once you get used to it, you won't even miss it.
Perhaps you can remove the mortgage insurance off your mortgage. On the original loan, you might have to pay it for the first 10 years, so you would still have to pay it for 5 more years.But... if you have made improvements to the home... or property values have increased dramatically in your neighborhood... you might be able to get the new loan without the mortgage insurance.
If you can, you will save an additional $100/month! With that savings you can move to the 15 year mortgage without mortgage insurance for the same amount that you are currently paying for a 30 year mortgage with mortgage insurance. Not bad eh? Whack 15 years off your mortgage just like that!Another way to reduce the monthly payment is to reduce the amount you borrow. If you could come up with the additional $3000 in closing costs from savings, your monthly payment on a 15 year mortgage would drop from $877.78 to $854.06 ... or only about $89. per month more than what you are currently paying.Is it worth $89/month to knock another 5 years off your mortgage? That depends on your personal circumstances! If your budget is already stretched to the limit, or it will put you at risk if you lose your job, NO.
But if you can find a way to come up with $3.00 per day, (perhaps by giving up cigarettes, or skipping a trip to the vending machine or to McDonalds) it will save you thousands over the life of your mortgage!To choose from dozens of places to search for the best mortgage rates check out http://yourfamilyfinances.com/yff/Resources.aspxUseful Mortgage Calculatorshttp://yourfamilyfinances.com/yff/calculators.aspx, EditorFinancial Trend Forecaster andInflationData.comThe Place in Cyberspace for Inflation Informationwww.YourFamilyFinances.comwww.fintrend.comwww.InflationData.com.
The Advantages of Refinance
Refinance - If you have at one time or another bought a home, then you
probably heard of the term "refinance." But what is refinance, exactly? Let's
go down to the basics. The term financing refers to the act of providing a
certain amount of money to an individual in order to buy a home, a car, a real
estate property, et cetera. Loans and mortgages are actually types of
financing. Now, when we say "refinance", therefore, it means that we are still
providing a certain amount of money. The prefix "re-" actually points to the
idea that you will be basically taking a new mortgage or loan to replace an old
one.
The Advantages of Refinance
Financial analysts will claim that refinance is a great option for
buyers when interest rates are low. The reason for this is quite obvious.
Refinance mortgages or loans allow you to take new loans for a relatively lower
interest...
Refinance > The Advantages of Refinance
Three Great Reasons to Refinance Your Mortgage
For those who are considering a mortgage refinance option this year, it may be a wise financial decision. Current interest rates are still at historically low levels, but they are beginning what appears to be a steady, continuous rise. Several key economic indicators are pointing to rising interest rates over the long term, as analysts predict the end of the ride for those record-breaking low rates we're enjoyed for the past few years.
Here are three great reasons to refinance:
1) Avoid Hikes in Adjustable Rate Mortgages
As interest rates go up, so will the monthly payments on those adjustable rate mortgages that were so popular during the recent real estate bull market. One of the most significant reasons to refinance right now is to switch from adjustable rates ? that will likely increase over time ? to predictable low fixed rate mortgages. Consumers who lock in lower rates now will save money and avoid the pressures that rising rates bring...
Refinance > Three Great Reasons to Refinance Your Mortgage
Mortgage Refinance
Microsoft Encarta defines ?mortgage' as ?an agreement by which somebody borrows money from a money-lending organization such as a bank or savings-and-loan association and gives that organization the right to take possession of property given as security if the loan is not repaid.'
Let's take two examples.
Bethany and Nancy want to buy a new house each.
But they don't have enough funds. However, Nancy has a large house whereas Bethany doesn't have any.
Is their a way out for them? Yes.
Both apply for a loan.
Bethany pledges the house that she is likely to buy.
Nancy pledges the house that she owns already.
In simple terms, a Mortgage Refinance is a loan to buy a home by pledging an existing or prospective home.
When people apply for Refinancing, their application is handled on individual merits.
They can submit the application directly to the lender.
Or, if they...
Refinance > Mortgage Refinance
What Home Refinance does for you
What Home Refinance does for youHome Refinance- Basically, a home refinance is paying off one home loan with another loan. So the question is, should you refinance or not? How do you know when it is right for you to get a home refinance mortgage? In other words, when does home refinance make sense for you?What Home Refinance does for youWhenever interest rates drop, as they sometimes do, homeowners might have the opportunity to save money on their loan payments. As a rule of thumb, lower interest rates translate into lower mortgage loan rates. Home refinance allows you to take advantage of low mortgage rates. With a new loan for a relatively lower interest rate, you can save a few bucks on every monthly payment that you have to make.The decision-making process of home refinance involves one basic calculation.
And that is if your savings from reduced mortgage payments are greater than the up-front costs. This then is where the basics of home refinance decision lie.Use a Home Refinance...
What Home Refinance does for you
Refinance > What Home Refinance does for you
Cash Out Refinance ? Home Equity Mortgage Loan or Cash Out Refinance
There are some definite benefits to doing a cash out refinance. Just make sure that overall you are not going to be spending more money in fees and interest doing a cash out refinance as opposed to a home equity loan. When you do a cash out refinance, you are refinancing your entire loan. Let's say you owe $300,000 on your home and you want to get $10,000 in cash out. If in refinancing your rate will be the same or higher, then you will be losing an extraordinary amount of money in fees just to get a $10,000 loan.
In a case like that, you would definitely want to go with a home equity loan.Home equity loans are better if:
- You have a large home loan yet only need to cash out of a small amount of equity
- You need to borrow up to 100% of the equity in your home
- You want a revolving credit line
- You want a payoff sooner, or longer than the term of the rest of your mortgage loan
- Going to refinance anyway
- Wanting to borrow...
Refinance > Cash Out Refinance ? Home Equity Mortgage Loan or Cash Out Refinance
4 Good Reasons to Get a Refinance Home Loan
Refinance Your Home Now and Lower Your Interest RateWhat is a refinance home loan? A refinance home loan or a home loan refinance is a new loan obtained through your lender or a new lender to pay off existing loan. However, you may opt to apply for a lower interest rate and or cash out on your homes equity.When should I refinance my home? It is a known fact that interest rates are lower than they have been in years. This is due to our fast paced and ever changing economy and market. Now would be the perfect opportunity to refinance your home to obtain a lower interest rate. Even a .25 difference can save you thousands of dollars a year in mortgage payments.
Why should I refinance my home?There are several reasons home owners decides to refinance. The four most common reasons include:To obtain a lower interest rateHome owner generally are aware of interest rate down fall. They take advantage of this opportunity by applying to a refinance loan to lower their existing interest rates...
4 Good Reasons to Get a Refinance Home Loan
Refinance > 4 Good Reasons to Get a Refinance Home Loan
TextMessages.com Users Receive Emails on their Cell Phones
Miami, FL (ContentDesk via ContentDesk Direct) November 21, 2005 -- TextMessages.com can make your cell phone act in a similar fashion to popular email mobile devices and pagers. Visit www.TextMessages.com. This new, free-to-use service enables cell and satellite phone users to assign a memorable email address to their mobile device such as JamesB007 @ TextMessages.com so they can receive...
Refinance TextMessages.com Users Receive Emails on their Cell Phones sample resume
Refinance > TextMessages.com Users Receive Emails on their Cell Phones
Debt Management ? More Ways to Save on Gas Consumption
The price of gas continues to climb, and with continued uncertainty in the Middle East, they will probably continue to do so. In California and elsewhere, prices for some grades of gas have now reached the previously unthinkable three dollars a gallon. Granted, that is lower than the inflation-adjusted prices of early 1981, but that doesn't make anyone feel better when they've just paid nearly $100 to fill the tank of their sport utility vehicle. In a previous article, we offered some solutions...
Refinance suv WHEN IS IT RIGHT TO REFINANCE? Debt Management ? More Ways to Save on Gas Consumption
Refinance > Debt Management ? More Ways to Save on Gas Consumption
Can Your eBook Idea Survive The '5W' Acid Test?
Can Your eBook Idea Survive The '5W' Acid Test?by http://www.idealmarketingcorp.comCan Your eBook Idea Survive The '5W' Acid Test?If you've been cruising the Internet highwayfor any length of time, you've run across tonsof ebooks. They've almost risen to mythical proportions as "the" vehicle for producingunlimited profits. Even with this flooding of the market, the door's still open IF you develop an ebook that's highly targeted,serves a 'want' and delivers quality content.So, you think you've...
Refinance electric generator
Refinance > Can Your eBook Idea Survive The '5W' Acid Test?
Kid Galaxy Introduces Innovative Toys and Games for 2005
Kid Galaxy, a company known for its fun, whimsical and remarkably creative radio-controlled toys, expands its most popular lines just in time for Toy Fair 2005. Expertly engineered with unique designs and attractive price points, each of these colorful, imaginative toys provides hours of fun. In addition, there's the bonus of extra entertainment as Kid Galaxy's R-C toys always do something completely unexpected. Even the controllers are cleverly designed to match each individual toy in color...
Refinance Kid Galaxy Introduces Innovative Toys and Games for 2005 toyo tires WHEN IS IT RIGHT TO REFINANCE?
Refinance > Kid Galaxy Introduces Innovative Toys and Games for 2005
Ways to manage hypertension
Question : I AM a working mother aged 44. My blood pressure reading is 150/90. What does my reading indicate? What should I do to manage my high blood pressure? I am really worried. Answer : Do see a doctor about your hypertension and follow with regular checkups. Hypertension or high blood pressure occurs when excessive force is exerted against the artery walls as the heart pumps blood.
It is a silent killer because people suffering from hypertension can be asymptomatic (without symptoms)...
Refinance
Refinance > Ways to manage hypertension