When Is The Time To Refinance Your House?
By Jessica Bennet
Only you can decide if you are having problems in making payments on the mortgage that is financing your home. If you are having problems in making the payments, refinancing is an option. Other than that another item to consider in order to find your answer to “should I refinance my house?” is whether you want to save money on mortgage payments. Refinancing can help you in saving money on the payments.
What is refinancing?
Refinancing is a process through which the payment terms and conditions of your home loan are totally changed. This happens as you take out a new home loan with low interest rate in comparison to the previous home loan you had taken and an extended loan term. As a result, the amount that you were previously required to pay the lender against the mortgage home loan. As the amount that you are required to pay reduces, it helps you in managing the on-time payments and thus you are able to save your home from getting foreclosed.
What are the criteria for refinancing?
There are various criteria under which you can refinance your home loan and these are:
1. If you are short of money – If you think that you are in need of some extra money, you can opt for cash out refinancing so as to get that extra money and use it for your requirements. Cash out refinancing is when you are able to get more money than what you owe to your previous lender. This can be done only if you have enough equity built up on our home.
2. If you want to save money – If you want to save money on your mortgage payments, if you think that the interest rate is too high and that is leaving with almost no money at the end of the month, you can opt for refinancing. It will help you in lowering the monthly payment amount and thus will help you save money.
3. If you want to save your home – If you think that you are running out of money each month and you are even unable to make payments on your mortgage, you can opt for refinancing. This helps in lowering the payment amount thereby making it more affordable for you to continue making the payments. Thus, the lender may not take away your home and sell it off.
4. If the mortgage interest rate in market is low – If you think that the interest rate on your mortgage is higher than that of the interest rate of mortgages in general in the market, it s better to refinance your home loan. There is no point making sky high payments when you already have the option to lower the same.
So, these are the circumstances under which you can opt to refinance your home loan and save money or save your home from getting foreclosed.
With her vast experience in the mortgage industry Jessica Bennet participates in the MortgageFit Community as a Mentor. Mortgagefit is the world’s largest mortgage community. Not only does she participate in the community forum offering her advice, she also makes contributions through different articles on mortgages.
Jessica may be contacted at (800) 969.6348.
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