Refinance Mortgage Loans – Money Saving Advice
Refinance Mortgage Loans – Money Saving Advice
Deciding whether or not it is time to refinance mortgage loans is always a bit of a gamble. Of course, the optimum time to refinance is when the interest rate is at its lowest. But, there is no way to know that for sure and it is always a bit of a gamble. Even when they are low like they are now, you can’t help but wonder if they might not go lower still. Every little nudge downward can save the mortgage holder thousands of dollars over the life a loan.
Mortgage refinancing considerations are even more complicated now with the economic crisis still in full swing. Lending institutions that were once giving loans and mortgages to just about anyone have tightened their belts considerably. It is, in fact, extremely difficult to even get a loan unless you have pristine credit and a good reason to need one.
When considering mortgage loans it is vital that you take into account how much longer you plan on owning that property. All loan originations have fees that the lender charges. After all, they are in it to make money. Examples of these fees include attorney fees and appraisal fees. There can be more depending upon the lender.
You may, in fact, be able to obtain a new mortgage with an excellent interest rate that will save you plenty in your monthly mortgage payment. But that savings must be weighed against the cost of the refinancing process. A rule of thumb in the refinancing businesses is that staying in a refinanced home for ten years will make it a worthwhile option.
If however you are planning to own the property for less than 10 years then it may not be worth refinancing. Even though the interest rates will be lower, the fees to get the mortgage will have pretty much negated your savings. That is why it is so important to carefully plan these things out and seek your best options.
Taking these things into consideration when looking into refinancing your mortgage will help you make the best decision for your particular circumstances. You can find a mortgage calculator on line that will help you compare your different options. Using different loan amounts, interest rates and fees will give you some bottom line figures to work with.
When considering refinancing options you will have the choice of two different types of mortgages and two loan term options. The first option is the fixed rate mortgage. It locks in the interest rate on the loan for the duration of the loan. The second is the ARM or adjustable rate mortgage. The interest rate on this type of mortgage can go up and down with the rate as it is adjusted by the Federal Reserve Board within a certain set of parameters. They usually start out at a very low rate. Mortgage terms are most commonly 15 years and 30 years.
An adjustable rate mortgage may be your best option if you plan to sell your home within a short period of time. It is important to recognize, however, that an adjustable rate can go up as well as it can go down. Make sure that if it reaches its higher end that your payment will still be affordable to you.
Weighing all the factors is crucial to refinance mortgage loans to your benefit. Taking the time to evaluate various scenarios and different outcomes will guide your decision making process. You will want to decide whether or not to refinance based on the long term results not just the amount of your immediate monthly mortgage payment. The hidden costs may end up costing you more than you save.
Newly married Martin Lewis is back and here with more money-saving advice about council tax
Money Saving advice for Mortgage Borrowers facing Negative Equity
Money Saving advice for Mortgage Borrowers facing Negative Equity
During the 1993 housing recession it was estimated that one and a half million homeowners had negative equity. The Council of Mortgage Lenders has announced that approximately 900,000 homeowners currently have some degree of negative equity. They believe around 600,000 of these homeowners have seen modest shortfalls of around 10%. When compared with the previous economic downturn which was more concentrated amongst the young and first-time buyers this time around it seems to be more evenly spread across a wider age group and people at different times on the property ladder.
Throughout the 1990’s the average base rate was 8.1% they did not witness interest rates tumbling to their lowest level since records started as we have seen this time. It seems that most people previously did not move house but choose to stay and continue to pay their mortgages. By 2000 their negative equity situation had reversed and they then found that their homes had increased substantially in value and equity.
Negative equity is never an issue unless you have to sell your home. The best money saving advice I can provide is that you stay in your home and weather the storm. The housing market has a habit of bouncing back it might just take a while to bounce back this time. As interest rates are low you should take full advantage of overpaying your mortgage if you are fortunate to have a tracker rate mortgage or a standard variable rate mortgage that has reduced your monthly mortgage payments.
Negative equity is a problem when people are struggling after a change in their financial circumstances possibly where one partner may have lost their job and they find themselves needing to sell their homes. This is often the case where people have over extended their finances by having large repayments for their mortgage, credit card debts and loans. All too often they have not taken out any redundancy cover to protect their mortgage payments and associated bills should they lose their jobs. Selling your home when you have negative equity is a nightmare!
So you think more of the dog or the kids and the wife?
When times are good most people believe they can walk on water and that it will never happen to them. When problem that was avoidable then comes along and knocks them off their self-satisfied branch high in the tree they seem to fall and wonder why they did not protect their home and family. Insurance of any kinds is a waste of money until one day you need it and you don’t have it but alas it’s too late. Its strange people will insure their pets with a £35 a month health plan for Rover the dog, their cars for fully comprehensive insurance and yet they don’t seem to insure themselves and their families should they lose their jobs or have an accident or sickness.
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