Fluctuating economy and turbulent job scene – Should you worry about mortgage? Are there better options to plan well? A high interest rate and economic downtimes make repayments even more difficult. Obtaining a new mortgage to replace or restructure an existing one is the simplest definition of refinancing. The reasons are varied when it comes to refinancing as an option, starting with a better loan rate and terms. At First Choice, we can talk and find the best options for refinancing.
Obtaining a reduced loan rate is by far the most lucrative benefit in considering refinancing. It helps to build equity on the home, decreasingthe monthly repayment amount. However, refinancing comes with a cost – an easy 3-6% of the principal amount. It is worth pursuing the option of refinancing if you can reduce the interest rate at least by 2%. You would also need to consider if you decide to stay on in your house for more time to allow for the gains. Otherwise, the associated costs and the chosen refinancing option may not give the right value advantage. It is therefore ideal to capture the break-even point. Now, you do not need to worry by analyzing all these as we help in identifying your readiness for refinancing.Reductionin interest rate has an immediate benefit of more income and associated financial flexibility. Over a long period,this would give additional merits of better and improved credit score, not to discount the dollars saved per annum. You could get loans at lower rates and for some, refinancing is sought after considering this aspect as well.
Another option is by choosing a reduced term of the loan, an example being a reduction from 30 years to 15, as you would save a good amount of the interest component over the loan tenure.There is a small emotional and pride angle, as some homeowners would love to retire as complete owners, keeping it debt free. But the choice should be after detailed deliberation as there could be cases where you need to check for any increase in monthly payment with lesser term.
Few other plans include conversions to fixed-rate and adjustable rate mortgages, the latter providing a low initial cost, but a risk of uncertainty. Adjustable rate mortgagesIt could add up to an increase in the monthly payment, if there is a sharp increase in the rates. Fixed-rate mortgage give rate and payment security even in the case of minor inflation surges.There is also a cash-out refinancing where-inyou can take equity out of your house and use that money towards home improvements or paying off debts.
There are closing costs attached to refinancing, which should not be ignored. Since you are a union member you will be saving BIG!Refinancing is not for everyone and a good understanding of a net tangible benefit is important. As always, there are pros and cons with each refinancing strategy and talk to us to know when is refinancing right for you. We at First Choice can help getting you a quote today.