Things You Must Know When Refinancing a Home Mortgage [mortgagerates-tips.blogspot.com]
Question by : Drawbacks in Refinancing Home Mortgage and Cash Back Loan? Hi, I am interested in refinancing my home mortgage and getting a cash back loan. What are the drawbacks to this? Will it affect my credit? Best answer for Drawbacks in Refinancing Home Mortgage and Cash Back Loan?:
Answer by chase
best not to borrow. refinancing may lower you current monthly payment, but in the long run it will cost you more. best to buy everything with cash, even a home. Living debt free is best. having no loans
Answer by Rick B
The biggest drawback is that you are going backwards. For most of us the goal is to pay off the house, not add to the debt. Not sure what you plan to do with the money, but you are also putting your home up as collateral for whatever else you plan to use it on. If you are using this to pay off debt, then you are probably taking a small short-term debt and turning it into a 30-year debt. Finally, you are most likely extending the time left to pay on your home. If you do refi, do so at a term that is EQUAL TO OR LESS than the years left on your current loan.
Four million Fannie Mae and Freddie Mac borrowers could stand to save hundreds of dollars per month refinancing their home mortgages under new programs that were not available until just a few short years ago. Nunziata: It's a Great Time to Refinance Your Mortgage
Recent problems in our economy have wrecked millions of homeowner's finances. This makes paying the monthly mortgage payment a real challenge for homeowners, which only gets harder every month. As other debts increase, and your money decreases, something will need to give. This is when refinancing or modification of a home mortgage can make sense.
Refinancing or modifying a home mortgage loan is a very good financial answer for a lot of homeowners. With a refinance, you can decrease the amount of interest you pay, which decreases the amount of your monthly mortgage payment. This money that is saved can be used for anything which the homeowner wants, though it is a good idea to have a general plan of what you are going to do.
However, there are a lot of homeowners, whom a mortgage modification or refinance would make perfect sense for, yet believe that it will not be the right choice for them for whatever reason.
Maybe this is due to the fact that they do not even know where to start, let alone how to do it right. To avoid this situation for yourself, try to remember the following points:- Always be aware of any closing costs or fees in addition to the interest rate being offered to you by your mortgage lender or bank. While interest rates are crucially important, there are still other financial things which need consideration. One of which is closing costs. If you are getting a quote with both high interest rates and excessive closing costs, than perhaps you should look around for a different lender. Finding different lenders and banks, using the internet, is very easy to do.
- Figure out if their any prepayment or early pay penalties or fees associated with your current home loan.
Typically, these fees are found with fixed rate home loans, but can also happen in ARM (Adjusted rate mortgage) loans. In order to prevent their profit being easily lost through a refinancing or modification, a lender will sometimes, not always, have a penalty charge for paying off payments early. Not all loans have this included in them though so ask you current lender or loan provider. So, always make sure, and include into your costs, whatever any prepayment penalties or fees may cost.- Always have all promises and quotes detailed and written down on paper. Refinancing a home mortgage is no small task, so ensuring that the rates and conditions you have been quoted is in your best interest. Before agreeing to anything with a lender or bank ask for it all to be written down and given to you prior to finalizing anything. If you are still not sure about terms, conditions, or anything else included in the loan documents, speak with a lawyer to clear any questions up.
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