Why Should I Refinance my Mortgage?
With Interest rates at all time lows; NOW is the time to consider a Mortgage Refinance, Second Mortgage, Home Improvement Loan or a Debt Consolidation Loan.
Refinancing replaces your existing loan with another lower interest rate loan for the same amount. This can save you tons of money when market interest rates drop 1 or more percentage points lower than your present rate. Refinancing can be used to reduce your interest rate, change the term of your loan, or to consolidate your debts.
Home refinance can be less stressful if you know what you are doing and have the knowledge to ask the right mortgage questions. One popular type of mortgage loan is cash out refinancing. Cash out refinancing is when you refinance your mortgage for more than you owe on it. It is ideal for buying a new car, financing college, or for any other large expenditure.
You of course will always hope to refinance your mortgage at a lower rate at the same time. For example, your home is worth 200,000 and you owe 120,000 on it. You may refinance it for 150,000 (at a lower rate) and pocket the other 30,000.
Tax Benefits
Refinancing can result in tax benefits, remember to bring this up with your tax advisor at the end of the year, You can write off the fees we charge and also any Prepayment Penalty you are charged. The prepayment penalty is all mortgage interest, which is a huge tax benefit for you. Consult your tax advisor for more information.
Consolidating mortgages and Debt
Another consideration to factor into your decision is whether or not you currently have a second mortgage, i.e. a home equity line of credit account (HELOC). By rolling in a second mortgage to one loan, you will typically realize a savings since the interest rate will be lower on the first mortgage. There are also advantages of consolidating revolving debt as well, such as eliminating the need to remember multiple monthly debt payments, which often times result in late payments. Consolida ting revolving credit card debt into your mortgage also makes the interest payments tax deductable.
Mortgage Holiday!
You will be able to skip your next mortgage payment as a result of the refinance. This does not mean you get a free payment, rather it just means the new lender is willing to roll in your next payment to the new loan. This gives you an extra month to make your payment. Usually the lender prefers this as well since they need time to organize and prepare your loan in their system.
Escrow Refund
Many borrowers have ESCROW ACCOUNTS, or (impounds). This is where the borrower chooses to have the lender roll in the taxes and insurance to the mortgage payment. If you have an escrow account setup with your existing lender, and you would like us to set up a new escrow account with the new lender, you will receive an "escrow refund" check from your previous escrow company.
Lower interest rates
With the lowest interest rates in 30 years, refinancing is a great move in today's market. Restructuring your monthly debt load through a refinance is a smart move right now.
Article by: Taylor Reaume, Senior Loan Consultant, First Source Financial, 6700 East Pacific Coast Hwy #190, Long Beach, CA 90803. Office: (800) 254-2251 x105; Cell: (562) 544-2355; Fax: (562) 683-0347. http://www.firstsourcelending.com
