Before you even consider a refinance, ask yourself this
fundamental question: "Why do I need it?" "Many times, people
take out a new, larger loan to pay off credit cards, automobiles
or even to purchase another home," says Norm Bour, host of the
nationally syndicated U.S. radio program The Real Estate &
Finance Show, and an experienced mortgage lender. "Sometimes
they need the money to do home improvements or renovations." If,
however, you want to lower your current loan payments or switch
to a different type of loan, you must calculate the benefits
before going the re-fi route. "If someone is going from a fixed
loan to another fixed loan, my general benchmark is to see a 1%
reduction of interest rates to justify it," says Bour, who also
teaches money-management classes in Southern California.
"Sometimes the borrower goes from a fixed-rate loan to an
adjustable to lower his payments. Sometimes he does just the
opposite-maybe to get away from interest-rate volatility. These
are very personal decisions, specific to each individual client."
You may already know-or suspect-that you will not live in your
current home beyond a certain timeframe (perhaps 5 years). If
this is the case, why would you even consider a 30-year loan?
"Sometimes, an adjustable-rate loan or a 'hybrid'-say, a 5-year
fixed, then converting to an adjustable-makes the most sense,"
Bour says. Find out more here: ">http://www.mortgage-for-all.com/50047.php"> Home Mortgages:
Think Before You Borrow
Do your homework before trying to qualify for a new loan. You
should know: ? The approximate market value of your property, as
"loan to value (LTV) is one of the primary factors that control
interest rate," Bour says. ? Your credit score, which will
affect your overall ability to secure a loan, as well as the
interest rates offered and the options available to you.
In certain cases, refinancing may not yield "a monetary savings,
per se," Bour says. This means there must be "compelling
reasons" to secure a new loan, he emphasizes. "A good loan
officer will ask a series of questions to help the borrower
identify his best option," Bour says. The officer should: ?
Assess your current monthly cash flow and potential future
risks. ? Calculate your monthly savings if you were to
refinance. ? Determine how long it will take you to break even.
? Fully explain the different types of loans and interest
structures. ? Disclose all closing costs and "hidden" fees
(origination fees, escrow, title, underwriting, interest, taxes,
insurance, prepayment penalties, etc.). ? Treat you with respect
and as an individual-not come up with a one-size-fits-all,
cookie-cutter approach to your financial future. Find out more
from our huge collection of expert mortgage and refinance
collection at: Expert
Mortgage Advice
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