Home Loans
Refinancing Benefits - Lower Payments - Pocket Some Cash
(presented by www.refinance-refinance.net - mortgage lenders)
By Michael Benifez
You may already be considering re-financing your home because you have heard
about the benefits. Although there may be situations where re-financing does
not make sense, there are so many where it does, that it pays to take a look at
this solution. In re-financing your home, you may be able to lower your monthly
payments and pay off some other debts. Using your home as a financing option is
usually the lowest cost way of raising funds. Examine these benefits to see if
it would work for you.
Lower Your Monthly Payments
This is usually the most attractive benefit of re-financing to most homeowners.
If you, like many homeowners, are living paycheck to paycheck and barely making
the mortgage, you will welcome the chance to reduce that payment. If current
interest rates are lower than the existing rate on your home loan, re-financing
will lower your payments because of the lower interest rate.
Here is how this happens: when you make your mortgage payment each month, the
payment is divided into two parts; part of the money is used to pay down the
loan itself, and part of the money is used to pay the interest on the loan.
Since you are now paying less interest, your payment will go down, and the
amount you pay on the principal of the loan will go up. This lowers the balance
on the loan, further reducing the monthly payment. When you re-finance, what
you do is take out a new loan and repay the old higher interest loan with the
proceeds of the new loan. If you have had the first loan for a while, most
likely you will have paid down some of the principal. So when you re-finance,
you take out a smaller loan and save even more on monthly payments.
Consolidate Your Debt
Re-financing a home may be the perfect way to consolidate your debt. If you
have credit card debt that is at high interest rates, you may be able to pay
them off with the proceeds from your loan and then just make the payments on
your home loan at a lower rate. If you have additional !
equity i
n your home, you
can pay off the first loan and perhaps some high interest rate loans such as
credit cards, auto loans, student loans or other debts.
total monthly payments, but will simply reduce the number of payments that have
to be made. This helps some homeowners who have a hard time paying all those
bills.
Another advantage of consolidating your debt is that you will have fewer checks
to write out each month. Paying down the bulk of your other loans and only
having one check to write on your home loan can give many people a lot of peace
of mind. Writing out dozens of checks each month can be upsetting and even if
the total amount is the same, it can feel like more when you have to write a lot
of checks.
Use the Equity in Your Home
Another reason for re-financing is that people realize that the value of their
home has increased, or that the principal has been paid down to a certain extent
and they can re-borrow on that principal. What the homeowner will then do is
“cash out” this equity in the home. Many people use this cash to make home
improvements such as an addition or a new kitchen, but as long as the equity
covers the amount of the loan, the money can be used for any purpose, including
starting a business of one’s own, taking a vacation, or paying for college. the
purpose of the loan is unimportant, since the loan is being granted on the value
of the house. Another option is a home equity line of credit, which is not a
single disbursement of the loan, but rather a credit line that can be drawn
against in gradual payments for various needs.
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Michael Benifez reports for
href="http://www.lifeinpalmcoast.com">http://www.LifeinPalmCoast.com, covering finance, mortgage, debt and insurance topics in Palm Coast, Florida and Flagler county. His recent artic! |
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For additional Mortgage Refinancing information
and resources visit Mortgage Refinancing.
(http://www.refinance-refinance.net)
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