Reduce Home Loans Top Tips on Refinancing
There are many things to consider before refinancing your mortgage. Although it can take some time to get the paperwork together and the process may be timely now is the time to weigh in the pros and cons of your particular situation and act according to your own best interest. With some thorough research and planning, refinancing your mortgage could turn out to be the best thing for your family and your pocket.
Refinance for lower rates
In 2012 the average interest rate on an outstanding mortgage was 5.098 percent, according to the Bureau of Economic Analysis.
If you have a high-interest rate this may be a time that you would like to consider refinancing your home. You may save yourself tens of thousands of dollars in interest by taking the time to fill out the necessary paperwork and gather the needed documents. Reduce Home Loans endeavour to give you that personal touch, delivering the best rates we have on offer.
Sometimes when you get a loan and you have a high loan to value ratio your interest rate can be much higher. If your house has risen in value or if you have made repayments to your home for some time you may notice that the rates that are on offer are much lower then when you first went to get your loan. This may be the perfect time for you to refinance your home to take advantage of the lower rates.
If once you were unable to provide income documents to have a full doc loan however in a position now to provide the documents you may see that there are lower rates on offer. Lo Doc loans tend to have higher interest rates than the Full Doc loans. Inquire what may need to be provided in your instance to ensure that you will fit the criteria for a full doc loan.
Refinance to remove private mortgage insurance
Some may feel it a benefit to refinance their mortgage to remove private mortgage insurance to save money (mortgage insurance premiums). Please seek financial advice if this is an option you would like to look at. It is important to look at the pros and cons for you and your family before taking this option.
Refinance to lower your repayments
This comes hand in hand with lowering your rates. By selecting a lower rate you reduce your home loan repayments which may free up hundreds of dollars a month that could be saved or invested. Although lowering your payment could increase the term of your loan, this could make sense in your particular situation if you are looking to have more money in the pocket.
Refinance to shorten the term of your loan
With cheap rates, you may find that you can save money, or better yet if you can manage your current repayments you may choose to pay off what was your 30-year term loan within a 15-year time span. For example, at a lower rate, you may be able to decrease the number of years of repayment. This may be the same repayments however if you will then have another (somewhat) passive income stream and be closer to your lifetime dream of early retirement.
Refinance to purchase a new property
By refinancing your home you may be able to use a portion of your equity as a deposit for a new property. For example, you may only now owe your lender 50% of what your property is valued, this gives you a great amount of equity to use for a deposit on that new investment home. Additionally, you may not want purchase a new home, however, looking to do improvements/renovations to your current home where a portion of the equity may be available for you to increase the value of your property.
Refinance to a lower fixed rate
Refinance from an adjustable-rate mortgage to a fixed-rate loan. If you are on an adjustable-rate mortgage, now may be the perfect time to take advantage of the current low rates on offer by the market. They are low now, however, there is never a guarantee of how long they will remain low. By fixing your rate this can protect you from rising interest rates in coming years. Additionally, a fixed payment is easier to plan for a budget and builds security.
Refinance to consolidate debts
There are many debts that you may consider to consolidate with into one i.e. Credit cards, personal loans, motor vehicle, mortgage home loan and more. By consolidating all your debts into one you secure only having one rate, if you were to fix your rate this would also guarantee what you would be paying back. This can also relieve stress especially if you are on a tight budget.
When consolidating two mortgages, this may open a door for you to start earning income from your investment. This would mean that the money that you receive from the investment property may assist to pay off your other mortgage especially if you are able to fix your low rate which will guarantee what repayments you will be paying.