By: Kathy Hildebrand
Buying a home is very important to many people the world over. Because houses are such a big-ticket item -- for most people, the most costly item they will ever purchase in their lifetimes -- the biggest hurdle they must jump over is getting a mortgage loan just to buy a house.
Once a loan is obtained however, it does not automatically mean the homeowner has stopped getting loans. Most homeowners refinance their mortgages from time to time, at least every 10 years if not much more frequently.
To refinance a mortgage is to replace it with a brand new loan, usually but not always from a different lending company. In so doing, the applicant (current homeowner) must go through a mortgage application process similar to the process of obtaining the original mortgage loan. Refinancing can be a very sound financial choice, if done for appropriate reasons.
There are good reasons and times to refinance, and there are also bad ones. Good reasons for home mortgage refinancing may include: reducing monthly payments by taking advantage of lower interest rates or extending the repayment period; reducing the interest rate by switching from an adjustable-rate to a fixed-rate loan or from a balloon mortgage to a fixed-rate loan; reducing the interest cost over the life of the mortgage by taking advantage of lower rates or shortening the term of the loan, and paying off the mortgage faster (accelerating the build-up of equity) by shortening the term of the loan.
It may be a good time to refinance a mortgage when it is possible to get a better rate or a better loan product to fit your needs, and when there is no current prepayment penalty that would eat up equity by paying off the original loan. A bad time to refinance a mortgage would be when rates are currently higher than the loan is already fixed at, and when paying off the current loan would mean incurring a prepayment penalty to the lender.
While it is possible, and many homeowners do it all the time, to use home equity to buy luxury items and finance vacations, it is not necessarily smart. The house is an appreciating asset, so its equity should only be used to buy other appreciating assets (such as other properties, or businesses) rather than items that are known to only lose value. It is not the best use of refinancing to get cash out to pay off credit cards that will only be spent up again due to out-of-control spending habits. It would be much smarter, for example, to use cash from a home to fix up the home and therefore increase its value, than to buy a luxury car that will depreciate as soon as it's driven off the dealership lot.
Gaining equity in a home is a wonderful thing; a solid investment. However, mortgage refinancing should not be viewed in terms of using a house as an ATM, because of the risk of dwindling equity -- a secure nest egg for the future -- for short-term inability to curb the desire for immediate gratification.
http://www.articleclick.com/Article/Mortgage-Refinancing--A-Big-Decision-Requires-Proper-Planning/915119
Showing posts with label Property. Show all posts
Showing posts with label Property. Show all posts
2007-08-11
The Best Refinance Investment Property Interest Rate
by Andrew Stratton
There are 4 tips to get the best refinance investment property interest rate possible. These are to learn about the basis for interest rates, use a mortgage broker, pay down your loan by paying points, and to negotiate the best rate you can.
Article:
If you are considering a refinance of your investment property mortgage, now is still a very favorable time. While interest rates are no longer at rock-bottom prices, the rates are still historically low.
Refinancing your investment property mortgage loan is never a simple matter, but there are a few things which you can do to insure that you get the best refinance rate possible. Here are 4 tips you can use to help you in the process:
Tip #1: Get the Best Refinance Investment Property Interest Rate by Doing Your Homework
Even if you choose to use a mortgage broker, you will find that interest rates constantly change, literally hour by hour. By taking the time to educate yourself about mortgage rates you can help yourself to better gage when the rate is at its best it is likely going to be. By reading about mortgage rate trends, the U.S. economy and other financial news you can help insure you get the best refinance mortgage rate possible.
Tip #2: Get the Best Refinance Investment Property Interest Rate Possible by Using a Mortgage Broker
Brokers are professionals in their trade. Just as an accountant is the best person to do your income tax returns, a commercial mortgage broker is trained and skilled in helping you to find the best refinance investment property rate possible. A broker has access to literally thousands of lenders and programs to choose from. They can suggest lenders for just about every scenario possible. If you have bad credit, if you are self-employed, etc., no matter what your unique situation is a commercial mortgage broker can help find you the absolute best deal possible.
Tip #3: Get the Best Refinance Investment Property Interest Rate by Buying Down
Assume for a moment that the best commercial mortgage rate available today is 6%. By buying down your rate you can lower your interest rates over the length of your loan. This is also called "paying points." If you were to buy down the 6% rate, you might easily end up with a 5.5% mortgage. The cost to you would be a few thousand dollars at closing; however, this would save you tens of thousands of dollars over the life of your mortgage term. Paying points always makes sense if you have the available capital and do not need to use it in other areas of your business.
Tip #4: Get the Best Refinance Investment Property Interest Rate by Negotiating
A little known fact is that mortgage rates and even fees are always negotiable! By playing two lenders, or even two brokers, against each other, you can come up with an absolute rock-bottom interest rate. Successful negotiation requires that you are always prepared to walk away from the deal, that you say "no" until you get what you are looking for, and that you are both patient and well educated.
By educating yourself, using a mortgage broker, paying points, and using simple business negotiation skills, you can get the best refinance investment property interest rate available. Whether you have excellent credit, or not so good credit, you can find an excellent rate and refinance your current commercial mortgage. By doing your homework you can save yourself thousands of dollars over the life of your investment property loan.
www.kiscl.com
There are 4 tips to get the best refinance investment property interest rate possible. These are to learn about the basis for interest rates, use a mortgage broker, pay down your loan by paying points, and to negotiate the best rate you can.
Article:
If you are considering a refinance of your investment property mortgage, now is still a very favorable time. While interest rates are no longer at rock-bottom prices, the rates are still historically low.
Refinancing your investment property mortgage loan is never a simple matter, but there are a few things which you can do to insure that you get the best refinance rate possible. Here are 4 tips you can use to help you in the process:
Tip #1: Get the Best Refinance Investment Property Interest Rate by Doing Your Homework
Even if you choose to use a mortgage broker, you will find that interest rates constantly change, literally hour by hour. By taking the time to educate yourself about mortgage rates you can help yourself to better gage when the rate is at its best it is likely going to be. By reading about mortgage rate trends, the U.S. economy and other financial news you can help insure you get the best refinance mortgage rate possible.
Tip #2: Get the Best Refinance Investment Property Interest Rate Possible by Using a Mortgage Broker
Brokers are professionals in their trade. Just as an accountant is the best person to do your income tax returns, a commercial mortgage broker is trained and skilled in helping you to find the best refinance investment property rate possible. A broker has access to literally thousands of lenders and programs to choose from. They can suggest lenders for just about every scenario possible. If you have bad credit, if you are self-employed, etc., no matter what your unique situation is a commercial mortgage broker can help find you the absolute best deal possible.
Tip #3: Get the Best Refinance Investment Property Interest Rate by Buying Down
Assume for a moment that the best commercial mortgage rate available today is 6%. By buying down your rate you can lower your interest rates over the length of your loan. This is also called "paying points." If you were to buy down the 6% rate, you might easily end up with a 5.5% mortgage. The cost to you would be a few thousand dollars at closing; however, this would save you tens of thousands of dollars over the life of your mortgage term. Paying points always makes sense if you have the available capital and do not need to use it in other areas of your business.
Tip #4: Get the Best Refinance Investment Property Interest Rate by Negotiating
A little known fact is that mortgage rates and even fees are always negotiable! By playing two lenders, or even two brokers, against each other, you can come up with an absolute rock-bottom interest rate. Successful negotiation requires that you are always prepared to walk away from the deal, that you say "no" until you get what you are looking for, and that you are both patient and well educated.
By educating yourself, using a mortgage broker, paying points, and using simple business negotiation skills, you can get the best refinance investment property interest rate available. Whether you have excellent credit, or not so good credit, you can find an excellent rate and refinance your current commercial mortgage. By doing your homework you can save yourself thousands of dollars over the life of your investment property loan.
www.kiscl.com
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