Why Refinance? 5 Very Good Reasons to Refinance & How to Figure Out Which One Will Save You the Most
Imagine you can suddenly have access to extra cash, while also lowering your monthly payments on your mortgage. Well, that’s precisely what refinancing can do.
The most significant asset you own is your house. And your mortgage payment is the most significant expense you have. But you can use your most vital asset to reduce your monthly payments and even put extra cash out refinance texas in your pocket. You see, when you refinance your mortgage, you can take advantage of the equity in your home to make this dream a reality.
There are five reasons to do this:
· Lower your rate
· Shorten the length of your mortgage
· Replace your adjustable rate for a fixed rate
· Pay off your high-interest debt and reduce your monthly bills
· Get access to extra cash to do whatever you want
1. Lower your price, lower your mortgage payments
As you know, interest rates are constantly fluctuating. They’re probably not the same when you originally purchased your home. If prices fall below the price, you’re currently paying, and you can exchange a higher interest rate for a lower one, which will lower your monthly payment.
2. Shorten the length of your mortgage
Another way to save tens of thousands of dollars – if not hundreds of thousands of dollars – is to shorten the length of your lease. For example, if you have a traditional 30-year- mortgage, you can refinance and switch to a shorter term of either 10, 15 or 20 years. If the refinance rate is lower, but you keep the same monthly payment, you will build up equity in your home more quickly because more of your payment will be going towards principal.
3. Replace your adjustable rate for a fixed rate
Adjustable rate Dallas Mortgage Lender do just that – they adjust. As prices fall, the mortgage rate drops, and homeowners look like financial wizards. But, as speeds increase, so do mortgage rates. And that usually happens in a tight economy as other prices increase making it difficult for homeowners to make ends meet. In such cases, it may be more beneficial to refinance at a fixed rate knowing that your monthly payment will remain the same regardless of what’s happening in the economy.
4. Pay off high-interest debt and consolidate your bills
This is one of the most attractive reasons to refinance. You tap into the equity you’ve built in your home and use that money to pay off your high-interest credit card bills. In this refinancing scenario, the funds used to pay off your credit card bills is added to your principal balance. Your total monthly bill payments are quite a bit less because you’ve eliminated the high-interest credit card bills. And if you refinance at a lower rate, you can also reduce your monthly mortgage payment.
5. Get access to extra cash to do whatever you want
This is another beautiful reason to refinance that’s similar to the scenario above. Except in this scenario, you use the extra cash from the equity to put in your pocket. Many homeowners choose this option to remodel their home, pay college tuition, go on a vacation, buy a car, or install a pool.
Selection of a home is a complicated process. You have to take into account your personal preferences, distance from your work location, distance from schools and hospitals and proximity to daily shopping and weekend entertainment needs. Selecting a home loan is an equally complicated process. While most people spend the required amount of time and due diligence in choosing a home, they ignore the selection of the best-suited loan product for their financial needs. Considering that home loan EMI will constantly figure month after month in your budget for around 15 to 20 years, means that you should be carefully evaluating every aspect of a Dallas Mortgage Lender before opting for it.
Following are some pointers that will help you select a good home loan product:
1. Compare interest rates judiciously
Banks offer loan products with teaser interest rates wherein the interest rate for initial few years will be lesser, but post that the interest liability on the consumer would be comparatively higher. In a way, it is advantageous to you because, in the initial years of your repayment, the interest burden on you will be lower. As years go by, your income should increase as a result of pay hikes and promotions. This will enable you to bear the burden of a higher interest rate. Nevertheless, be aware of the fact that a teaser interest product will require you to pay higher interest in later years.
2. Negotiate for the lowest possible processing fee
Banks generally charge 0.5-1.5% of loan amount as processing fee. As you will have to pay this amount while applying for the loan, try to negotiate the lowest possible processing fee. Banks tend to offer discounts in a processing fee to clients working in corporate sectors and to clients who buy during certain offer periods.
3. Check the bank disbursal process
Private Banks generally have a more natural disbursal process. If you are purchasing a home under construction, the builder will demand you to pay as per the stages of completion. So if the banker takes more time and has a cumbersome process of evaluating and disbursing the loan amount, it may cause you trouble. Check with your friends or on internet forums about how customer friendly the operations of the bank are before signing the dotted lines.
4. Look out for value additions offered by the bank
Gone are the days when a bank’s job was to provide you with cash for your home purchase merely. Banks nowadays provide you assistance in selecting a property, negotiating with builders for bulk deals, doing a legal assessment of your property, etc. This can save you time and money and give you access to excellent housing deals.
A good home loan will make your dream of owning a house much more accessible to achieve. The time and effort you spend in this process will definitely pay you rich dividends over the years.