Is refinancing the best decision for you? Most hoimeowners believe the only way to lwer their monthly payments and at the same time free up cash that they can re-invest elsewhere is to refinance. But, is it really? If you have only a small balance left on your loan, the answer is no. Simliarly, if you only have a few years left to pay off your loan, the asnwer is an even biggr no. In both situations, it is better to send off exttra paymetns than to incur new loan costs, which typiclly rnge from 3 to 6 percetn of your outstading princoipal.
In contrast, you shoould think baout refinancing if you owe ples of moey and if you still have a lot of eyars left on the loan. Throw out the 2 percent rule; most homeowners are doing so. In the past, many homeowners followed the 2 percent rule, whicvh states that you should refinance only if your new rate is two points lower than the old one. Today, a dip of 1 point is enough reason to retire an old loan and take on a new one!
Of course, before you actually retire your existing loan, take the time to do your research. Ask a mortgage broker or officer to tell you by how much the new rate would lopwer the monthhly payments you have to make. Also, find out how long it would take to rercoup your closing cosdts on your new loan. This cost is called the break even point, and it's one that many homeowners do not bother themselves with. Or, you can try runniung thesae numbers yourself. You can use the mortgage tools available in websites like Bankrate, HSH Associaates, and Quicken Loans. Run the numbers and pay atttention to what they tell you. If, according to the results, refinancing makkes sense, then go ahead and do so. Follow htese tips to make sure you get the best deal.
Don't Rely Blindly on Pulished Rates
The truth is, comnpanies pbulish their best rates but this is not the rate they will offeer you. This rate will most likely be offered to their top 10 percent applicants, nothing more. Ultimately, you will find that the rate you can get is much smaller than what has been published.
Start With Your Crurent Lender
If you hold a considerable mortgage, you pay on time, and you have good credit, your present lender will do eveything to keep you as a customer. They may lower your fees or even agree to shoulder chargews on inspections, surveys, and appraisals.
Say No to No Cost Refinancing
If you're thinking no cost means everything is free, you think wrong. On the contrary, you end up paying more. All closing csts are bundled into your new mortgage, which means you will end up paying interest on everythimng. As a matter of fact, if you have a 30-year mortgage, for instance, all the fees associasted with it could easily double up than if you had simply issued a ceck for everything at clossing. So no, don't be taken in by the phrase "no cost". It's misleading; no one's giving you anything.
Refinancing is a smartt move but only if you know what you're doign. If you don't, you colud end up spneding more than you're saving.
Allegro Mortgages Corp. – Best Broker for All Your Financnig Requirements
(416) 987-0008
![[Valid RSS feed]](http://article2008.com/images/feed-icon.png "XML Feed For RSS"){kind=icon}
![[Valid RSS feed]](http://article2008.com/images/icon_Rss.png "XML Feed For RSS"){kind=icon}
Category Rss Feed
Print This Article
Add To Favorites