Okay homeowners, gather around so we can have a pow-wow about a topic that some would find easy to talk about while others feel it is nerve-racking. Taking everyone’s feeling into account, I ask that those who feel uneasy discussing this to take a deep breath, let it out and keep an open mind until I finish what I have to say. The topic of refinancing (there; I said it and try to remain calm) is understandably difficult to discuss when it is not something that can be done quickly; that is, if you want it done correctly. This means not only are you looking at the process as a means to achieve a solution for an immediate financial situation but to also become a benefit for a mortgagee in the future. The saying, “kill two birds with one stone” should be the kind of thinking when using a refinance to it’s’ peek potential. By failing to do this, it is no wonder why some feel unnecessary stress or anxiety during the process as well as the final outcome. In order to try to alleviate any nervousness for those hesitant in going through with this, knowing how to refinance will make clear reasons why homeowners refinance as well as realizing how beneficial the outcome can be.
Knowing how to refinance will allow Homeowners to see Reasons for doing this
One reason why homeowners choose to refinance their home is to lower the interest rate from the original. Since interest rates influence what an individual will have to pay on the loan each month, the lower the rate, the lower the monthly payments would be. Lower rates can occur when there is either a change in marketing conditions or your credit score has improved after signing the original loan. Keep in mind that having a low interest rate can offer a way to build equity in your house sooner rather than later.
A second reason would be if the borrower wants to change the scheduled payment that was agreed to in the original mortgage. Those who seek to length the terms of the loan benefit as this would shorten the amount that has to be paid each month. A drawback to this is since the new mortgage will take longer to pay off; the amount of interest that must be paid back will increase. With a shorter mortgage such as having a fifteen year mortgage instead of a thirty year one, usually have lower interest rates. Also, since the loan is being paid back at a quicker pace, the less the interest rate costs you will be responsible for. The down side to this is the monthly payments tend to be higher since the borrower is paying more principal on a monthly basis. Without knowing how to refinance, a homeowner could end up taking a loan that would prove later to be costly.
A third reason deals with an adjustable-rate mortgage and a fixed-rate mortgage. When the interest rate is adjustable, it means that a borrower’s monthly payments will change based on what the rates are month to month. If they go down, then the monthly payments will be less. If they go up, so do the monthly payments. It would be wise to avoid this type of mortgage if it appears that interest rates will be going up in the near future. Those who would like to have a somewhat peace of mind might want to consider a fixed-rate mortgage. With this type of a mortgage, the rate that was agreed upon on the day of the refinance will remain the same until the loan is finally paid back in full. Again, keep in mind that if a lower rate becomes available, you won’t be able to take advantage of it.
Homeowners can now be more comfortable talking about getting a new Home Mortgage
Now we come to the part where I see if those who were reluctant to talk about this topic are more at ease than when we started our pow-wow. I will admit when I first approached this process that I knew very little about refinancing. To say that I was uncomfortable about wanting to take the time in researching this would have been an understatement. However; when I did sit down and researched the process, I realized it was not as bad as I thought as I educated myself in knowing why homeowners go through with refinancing their home and if done correctly, can utilize their new home mortgage to its’ full potential and benefit. Though I am not claiming to know everything about how to refinance, I know enough to talk about it as well as where to look for additional information. I cannot stress enough that knowledge is the key in order to comprehend and realize how to get the maximum benefit of a refinance. Hopefully, our discussion will lead non-believers to be curious and comfortable enough to look into refinancing and if it can be useful, to go for it so at the end of the day, a mortgagee will be glad he/she did.