5 Tips to Ensure You are Really Saving Money When Mortgage Refinancing

As one of largest debts that you will ever have in your life, your mortgage can be a great stress. Mortgages are debts that people have to live with for a large part of their life. So it's obvious that you want the best mortgage deal possible. If you don't feel that you currently have the best mortgage possible, then perhaps mortgage refinancing is the solution for you. Mortgage refinancing may offer a good opportunity to relieve the burden of debt and make your mortgage work better for you. However nobody makes decisions about their mortgage lightly. As a significant part of you financial well being, making changes to your mortgage will often cause you to have doubts:

- Am I doing the right thing?

- Is my mortgage going to be more expensive?

- Why am I even refinancing?

These doubts are legitimate and you should always make sure to consider all factors before refinancing your mortgage. Here are 5 points that can help you make a decision about refinancing.

Is your first mortgage the best possible deal?

It's more than likely that your first mortgage will not be the best deal. Despite this most people stay with their first mortgage because of uncertainty, complacency or apathy. By not being a more informed consumer many of us miss out on better mortgage deals and wind up paying too much in interest and / or fees.

Even if your interest rate is competitive with the best buys in the marketplace, there could be other restrictions on the mortgage that are preventing you from extracting the best value from your loan facility. Once again it pays to be an informed consumer.

Other mortgage deals can give access to line-of-equity withdrawals, extra payments options, increased frequency payment options or even lump sum payments. Through mortgage refinancing it may be possible to give yourself an opportunity to obtain the best mortgage product available for your needs.

Explore all potential scenarios

For the best possible savings, mortgage refinancing requires you to keep your property for as long as possible. In reality your savings will not be that great if you sell your property in two years compared to ten years. To get a clearer picture of the savings you could make, calculate the cost of refinancing with these scenarios in mind:

- Keeping the house indefinitely

- Selling the house soon

- Selling the house in ten years

- Keeping the house as an investment property

These scenarios will each produce a different result and give you different savings. It's important to consider the scenario that most relates to your situation. Only once you have explored these scenarios should you proceed with refinancing.

Prepare a Future budget

By budgeting for the future you can work out whether a mortgage refinancing deal will really save you money. In order to budget for the future in relation to your mortgage, you need to calculate the amount of interest you pay over the term of the mortgage and do the same with each potential mortgage refinancing product you are considering. You will find that some products may end up being more expensive and others cheaper for you. Only by doing this can you find which mortgage refinancing product is best for you.

Use this opportunity to cancel your other debt

Most of us have other debts to contend with as well as our mortgage. It is not uncommon for people to have credit cards with balances that add up to $5,000. Many refinanced loans can offer you the opportunity to eliminate this debt by consolidating it into your refinanced loan. This can potentially remove your high interest debt of 15-20% and above and turn it into low interest debt. The money you save every month on servicing that debt can be used to overpay your mortgage and reduce that debt by tens of thousands of dollars over the course of the term. Be mindful that you will be extending the term of the credit card debt so paying higher amounts to repay it early has definitely got to be a priority.

Calculate fees vs. Interest saved

Refinancing your mortgage can often result in fees of up to $5,000 or more; this discourages many people from refinancing. However in order to get a true picture of the savings you will be making you should compare the fees against the potential savings made from reduced interest. You will often find that the money saved from interest far outweighs any fees you might incur. Whilst you may pay fees initially, it is possible for you to make savings of tens of thousands of dollars.

Before you make any decisions about your mortgage you should take these factors into consideration. You might find that mortgage refinancing is the solution for you.

Be mindful of lenders or brokers encouraging you to refinance without asking you what outcomes you want, what your motivations to refinance are or bothering to get a good understanding of your personal and financial position. If their only interest seems to be to refinance you and only speak about 'cheap interest rates, no fees' but not about getting the outcome you are after - RUN!! These are not the people you should entrust your financial and lending matters to.

Best regards,
ez
Mortgage Refinancing

The Start Of The Home Equity Loans

A number of years ago, banks introduced homeowners to a new
product called "home equity loans". This gave people the
opportunity to cash out the value they had in their property and
spend it for a variety of things. There were almost no
limitations as to what you could do with the money.

Many people used it to remodel or add onto their existing homes
and that at least resulted in an increased value for their
homes. Some used it for a down payment on a second home, while
others financed college educations for their children. There
were some who purchased new cars or went on extravagant
vacations with the funds they withdrew from their homes. Chances
are that it was the introduction of home equity loans that
eventually contributed to the current recession.

Home equity loans were available in two types. One was a
straight home equity loan for a specific amount of money,
usually a percentage of the value you currently had in your
home. Another type was a Home Equity Line of Credit that allowed
people to write checks against a credit line and then make
payments according to the amount they've borrowed. Rates and
terms varied greatly with this particular type of financing and,
unfortunately, homeowners saw it as easy cash that they could
access for anything they wanted at the time. Rates were often
adjustable and related to the current prime rate. Anything that
was not a fixed rate was particularly dangerous. Not everyone
used these loans wisely.

Most homeowners used these funds for non essential purchases,
without ever realizing the exact terms of the loan and that they
will be paying these funds back over the life span of the loan.
Home equity line rates, also tended to be higher than a mortgage
rate. Since a mortgage rate was much less, many homeowners then
decided that refinancing their homes was the best way to go.
This also lead to the home no longer having equity and it also
lowered the net worth of the homeowners. Refinancing was only
beneficial to a homeowner if they used the money as an
investment that would increase their net worth.

When money became tight and banks realized that they had serious
financial problems, many began to close the Home Equity Lines of
Credit that they had extended to homeowners. Of course, people
who had been given home equity loans were not effected, because
they already had, and spent, the money offered by the banks.
Others, however, were shocked to find that money they believed
would always be available to them had been taken away. This may
have been a blessing in disguise for these homeowners, but I
doubt that they saw it that way at the time.

Merry Christmas & Happy New Year,

ez

Mortgage Refinancing

Mortgage Loan: 5 Things To Take Into Account Before Buying A Home

While buying a home is an exciting effort in a lifetime, it is for sure something that has to be taken seriously. Of course,you won't be buying anything as high-priced as a home in your
life. Therefore, you want to take the time to research and study all of your options.

Below are 5 essential points to know before buying a house:

1. Clean your credit history
It is quite sure that a majority of us cannot afford to spend an
amount big enough to finance a house at once. Because of this,
applying for a loan is essential for most people. You will need
to make sure you credit history as clean as possible so that you
will be accepted. It is advised that you have copies of your
credit report some months before you begin shopping for a home
so you know what to expect.

2. Do not go beyond your limits
Because of the subprime crisis, there are so many homes on the
marketplace to choose from that it can be hard to find the
perfect one for you. But it not a reason to not to stay within
your financial limits and try to reach too far. The general rule
of thumb is that when buying a house you want to look for one
that is two and a half times your annual salary. But even then,
it is strongly advised that you find a calculator online that
will help you to figure out what you can afford according to
your income, debts, and expenses.

3. Choosing to buy in a school district
If you have children, you will surely buy a house within a
particular school zone. However, it can be a good idea to buy a
house in a school zone even if you do not have children. The
reason for this is because strong school districts are a top
priority for many people who are looking for a house to buy.
Buying a house in a school district will allow you to make a
significant amount of money when time will come to sell it.

4. Get help
Buying a house is a hard task and you won't probably have the
time it takes to run here and there, visiting and comparing
prices. It allows you to find many more homes on the market that
are within your financial limits and have the advantages you are
looking for. Let the real estate agency hunt down the homes you
desire.

5. Hire a house examiner
When buying a house, it is safe to say your lender will require
you to have a house valuation. However, that kind of valuation
is done in the sole interest of the bank. In order to discover
any potential problem in the house that can be costly, it is in
your best interest to hire a home examiner.

There are different things you will want to take into
consideration before acquiring a house. Since this is the most
crucial move in your life, this is for sure not something you
want to make a rash decision on. Remember the five tips listed
in this article the next time you go looking for a house.

Best regards,

ez

Mortgage Refinancing