Refinancing Home Loan
Refinancing Your home loan or mortgage can offer several benefits, but only if done under the right circumstances, for the right reasons, and at the right time. Considering these 3 crucial factors can help you make the right refinancing decision.
Loan Consolidation
If you would like to consolidate your various debt obligations into an all-in-one loan, a Home Loan is a good option.
With credit card consolidation and other sundry personal loan consolidation into your home loan, you save time by making one payment. You might also feel more in control of your debt in this way.
Switching to a Lower Interest Rate
If you made your loan application quite some time back, interest rates are sure to have changed.
Home Loan or mortgage helps you take advantage of lower interest rates for the same term or an increased term.
For instance, your loan may change from a 10-year loan to a 15-year loan. But you may like to stick with this option if it helps your budgeting and makes more money available for daily expenses every month.
To Access Home Equity
Home Loan or mortgage helps unlock the equity in your home. A professional mortgage broker can help determine your home’s current worth.
If your balance mortgage on the home is much lower than the value of your property, you can avail the benefits of a ‘cash-out’ refinance.
A new loan repayment schedule under different conditions is established for you. And the difference in value comes to you in a lump sum payment.
You can use the money for investment in another property, renovation, or for securing the future.
Of course, this reason will work for you only if you have positive equity in your home.
Personal Factors Affecting Refinancing home loan or mortgage
Though there are several benefits of refinancing your home loan, it may not be the right option for you under the following circumstances
- If you don’t intend to keep the current property for long. In that case, the costs associated with refinancing include the cost of exiting the current loan and entry costs and application costs for the new loan.
- If the penalty for exiting your current loan is very high (some banks have very stringent early termination clauses) and benefits from adequately cover those penalties.
- When your credit history is not very good, you are unlikely to get satisfactory new loan repayment rates.
- When your current income level and/or job status is not secure, your refinancing Home loan application is unlikely to be viewed favorably.
In such cases, it is best to carry on with the current principal and interest terms rather than go for refinancing.
Plan of Action for Refinancing home loan
If however, you do feel you are in the right place at the right time and refinancing home loan or mortgage is right for you, go ahead.
Get in touch with the mortgage brokers and experts at MacArthur Mortgage Finance, who are committed to offering your the best financial services free of cost in all areas including refinancing.
