5 Great Reasons to Refinance

[asimahm]

Hi I have recently joined this forum and I would like to share some valuable knowledge on Refinancing. This is not a spam post.

There are many great reasons to refinance. With lower cost, adjustable rate, and 0-down options, traditional loan programs like 30-year or 15-year fixed rate mortgages don't always allow us to meet our financial goals. Today, even reducing your mortgage interest rate a little can save you big over the life of your home loan. Take a look below at 5 great reasons to refinance.

1. Lower Your Monthly Payment
If you plan to live in your home for a few years, it may make sense to pay a point or two to decrease your interest rate and overall payment. Over the long run, you will have paid for the cost of the mortgage refinance with the monthly savings. On the other hand, if you plan on moving in the near future, you may not be in your home long enough to recover the refinancing costs. Calculating the break-even point before you decide to refinance can help determine whether it makes sense.

2. Switch From an Adjustable Rate to a Fixed Rate Mortgage
Adjustable rate mortgages (ARMs) can provide lower initial monthly payments for those who are willing to risk upward market adjustments. They're also ideal if you don't plan to own your property for more than a few years. However, if you have made your house a permanent home, you may want to swap your adjustable rate for a 15-, 20- or 30-year fixed rate mortgage. Your interest may be higher than with an ARM, but you have the confidence of knowing what your payment will be every month for the rest of your loan term.

3. Escape Balloon Payment Programs
Like adjustable rate mortgage programs, balloon programs are great when you want lower rates and lower initial monthly payments. However, if you still own the property at the end of the fixed rate term (usually 5 or 7 years), the entire balance of your mortgage is due to the lender. If you are in a balloon program, you can easily switch over into a new adjustable rate mortgage or fixed rate mortgage.

4. Remove Private Mortgage Insurance (PMI)
Zero or Low down payment options allow homeowners to purchase homes with less than 20% down. Unfortunately, they also usually require private mortgage insurance, which is designed to protect the lender from loan default. As the value of your home increases and the balance on your home decreases, you may be eligible to remove your PMI with a mortgage refinance loan.

5. Cash In on Your Home's Equity
Your home is a great resource for extra cash. Like most homes, yours has probably increased in value, and that gives you the ability to take some of that cash and put it to good use. Pay off credit cards, make home improvements, pay tuition, replace your current car, or even take a long-overdue vacation. With a cash-out mortgage refinance transaction, it's easy. And it's even tax deductible.

Let me know what you guys think,

Asim

[jeffrey]

It's never a good sign when someone starts off their post having to disclaim it as a spam post. The fact that this exact same info has been placed on numerous other forums makes it spam...BUT, I'll leave this up just for the humor of seeing the responses to the "Cash In on Your Home's Equity" idea.

[asimahm]

This post was not meant for spam, notice how I am not directing anyone to visit any particular site, or product. I have a set of plr (private label rights) products, and as I was digging through my hard drive I found this article. Thought it would be an interesting post, I apologize if any harm has been done.

[myrdale]

5. Cash In on Your Home's Equity
Your home is a great resource for extra cash.

Asim

So are your kidneys. That doesn't make it a good idea to sell them though.

[cschin4]

Refi also costs money, sometimes several thousand dollars of costs, appraisals, and so forth. There is no "free" refi though they might want to make it appear so. If you are going to do a refi, you would also need to see how long it would cost you to recoup the closing costs before you decide . If you were planning to move, doing the refi may not be worth the additional costs incurred. Also, I would strongly recommend against tapping one's equity or increasing the amount of principal loan. Refi if it will save you in the long run and you plan to stay. Don't do it to use your home as an ATM.

[kork13]

So are your kidneys. That doesn't make it a good idea to sell them though.

seriously laughed out loud! hahahahaha

[KTP]

Refi also costs money, sometimes several thousand dollars of costs, appraisals, and so forth. There is no "free" refi though they might want to make it appear so. If you are going to do a refi, you would also need to see how long it would cost you to recoup the closing costs before you decide . If you were planning to move, doing the refi may not be worth the additional costs incurred. Also, I would strongly recommend against tapping one's equity or increasing the amount of principal loan. Refi if it will save you in the long run and you plan to stay. Don't do it to use your home as an ATM.

Not totally true. I refinanced with zero costs (they even paid the fedex shipping) with wells fargo last year and dropped my rate 0.625%

[bjl584]

I like the part about taking the long overdue vacation. Maybe I could vacation to a country where the doctors would be willing to remove my kidneys for extra cash. Of course my kidneys would have to be worth more than the cost of the vacation. I wouldn't want to lose money and my kidneys at the same time. This could be more complicated than I originally thought.

[disneysteve]

4. Remove Private Mortgage Insurance (PMI)
Zero or Low down payment options allow homeowners to purchase homes with less than 20% down. Unfortunately, they also usually require private mortgage insurance, which is designed to protect the lender from loan default. As the value of your home increases and the balance on your home decreases, you may be eligible to remove your PMI with a mortgage refinance loan.

You do not need to refinance to stop paying PMI. Once your equity is above a certain threshold, you can just contact your lender and get them to drop the PMI.

5. Cash In on Your Home's Equity
Your home is a great resource for extra cash. Like most homes, yours has probably increased in value, and that gives you the ability to take some of that cash and put it to good use. Pay off credit cards, make home improvements, pay tuition, replace your current car, or even take a long-overdue vacation. With a cash-out mortgage refinance transaction, it's easy. And it's even tax deductible.

This advice was of questionable value 5 years ago when the real estate market was booming. Today, it is utter nonsense. People using their homes as personal ATMs got into all kinds of trouble and were responsible for a good part of the market meltdown. There are times when a HEL can make sense, but you should NEVER NEVER NEVER borrow against your home's value for a luxury purchase like a vacation. That is just wrong on every level.

[wincrasher]

Good grief.

I did get a laugh though on the BS that thru refi you can eliminate PMI. For those that are unaware, you can do that simply by applying with your existing lender, if you have accumulated 20% equity. Good luck with that these days though!

Cashing out your "equity". I've got 2005 on the phone ... they want their idea back!

[bjl584]

Great information about Refinance. You have good knowledge on financing system. I always use refinanceitt.com site to get information on any types of mortgage refinance system.

OK. Either you know the original poster, you work for the original poster, or you are the original poster.