As a homeowner, refinancing your already existing mortgage loan could be one of your options. Before deciding on it, you must make sure that you are fully aware of the payment terms of your loan. You must also be able to gauge whether you can actually pay all your financial obligations in your mortgage loan. Basically, when you refinance your home loan, you are adjusting the payment terms of your mortgage. You may opt to pay your remaining loan for a longer time by adjusting the monthly payment by less than the original. You may likewise opt to pay your remaining loan for a shorter time by doing the opposite. Whatever choices you have, it is important that your refinancing decision should go as planned; otherwise, you may end up having more problems with your finances in the future, paving way for debt.
What you must know about home loan refinancing
First, you must be aware of the ins and outs of home loan refinancing. Back yourself up with knowledge about it; know what might influence you to receive the rate for your mortgage loan adjustment. Is your credit score good enough to approve of your application to refinance your loan? Is the size of the loan enough for you to get the rate that you want? Also, mortgage rates displayed by a lot of refinancing companies and entities are just baits to actually entice homeowners to grab the opportunity. It might turn out to be a bad decision if you fall into these traps. If you are aware of the general concept of refinancing but you are not sure if you will be doing the right thing, you might want to take advantage of the services of mortgage brokers who are capable and experienced in prioritizing your interests.
Lengthen or shorten my payment terms?
It’s really up to you whether you opt to go for extending the mortgage payment terms or having it shortened. When you want to lengthen your payment terms, you will be paying smaller monthly payments, but you may extend another two years or more in your existing payment terms in your mortgage, not to mention paying more cash within the rest of your mortgage to cover interests. When you want to shorten your payment terms, you must know that you will be paying more every month but then you won’t be paying more in interest payments over the course of your mortgage.
Holding off your plan to refinance
True enough, refinancing your existing home loan is a definitely something that needs careful consideration. Seeking help from professionals such as brokers would do you good; they may even advise you not to refinance if any of the following situations exist:
·You have spent years investing on your current mortgage. Once you’ve done so, you’ve already built up your home’s equity. In other words, you’ve already paid off a huge amount of principal on your home. Refinancing at this stage wouldn’t be the best option, since the amortization process would be starting all over again.
·You are planning to move out on your current home at the soonest time possible. Doing so and having to go refinance your home loan would not make sense at all. What you may be paying for your refinancing might be what you may potentially be paying for your new mortgage in your newly-acquired home.
·A prepayment to avail of a mortgage loan refinancing might be too costly for you. This fee covers mostly interests. Although you can ask your lender if you it can waive off the prepayment fee, it is likely that you won’t get want you want. In this case, it might be best to hold off refinancing altogether.
In this seemingly tough decision to refinance an existing loan, it is imperative that you seek the help of expert mortgage brokers. That way, you can know whether or not the time is right for you to do so and avoid any inconveniences along the way.