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Is Home Mortgage Refinancing Really Worth It?
Is it really worth it? Excellent question... since the refinancing process can take upwards of 2-3 months to complete, plus the expenses and hassles of refinancing may outweigh the benefits.Not everyone should refinance just because rates are lower. The general rule of thumb is to consider refinancing if rates are at least 2% lower than your current rate.
This is considered a safe margin.
Also, consider these things...
Are you planning to sell the house at any time? If so, how far into the future? It may not be beneficial to refinance now. Many people who are "in the know" say that it takes 3 years to fully realize the savings from refinancing; considering in all of the costs of refinancing.
Will you have to pay a penalty for closing the current loan? This may be substantial enough to change your mind about refinancing.
Do you have an Adjustable Rate Mortgage? You may want to lock your loan in at the lower rate if you are fairly sure the rates will rarely, if ever, get this low again.
Do you want "Cash Out" to pay other debts, etc.? Keep in mind that if you ask for "cash out refinancing" that the amount of your loan is usually limited to 80% of your home's value. Of course, all things being different, you should check with your lender to see what exceptions may apply. If you need cash, but the straight refinancing option isn't equitable, you might want to consider getting a Home Equity Line Of Credit. This lets you borrow against the equity in your home with a credit account, checking account and/or direct payment.
Is your loan owned by Fannie Mae or Freddie Mac and if so, do you have at least 5% equity in your home? The higher the Loan-To-Value (LTV) number the better for you. Most lenders expect you to have at least 10% equity in your home to qualify. 10% equity in your home gives you have a Loan-To-Value (LTV) of 90%. However, if your loan is owned by Fannie Mae or Freddie Mac, your LTV could be 95% - meaning you only need to have 5% equity in your home to qualify. Contact the company where your mortgage payments are sent and ask them about your LTV.
Because each situation is unique, there are several more things to consider. Spend a little bit of serious time researching this topic until you are satisfied with the quality of answers you have found in regard to your own situation.
The wrong decision could... well, hurt. The right decision could end up saving you quite a nice little nest egg.
About the Author
To learn many more beneficial tips about the home mortgage refinancing process, including the various fees to expect, visit:
http://www.privilegedinfo.com/refinancewisdom.html . Steve Shannon is webmaster at PrivilegedInfo.com.
More Useful Resource and Updates on mortgage loans home refinance process service us
- Banks slash home loan rate (Perth Now)
THE big four banks have all reduced their variable home loan rate by 80 basis points, passing on most of the Reserve Bank's full percentage point cut.
- Bank of America creates home retention program for Countrywide customers (Banking Business Review)
Bank of America has announced the creation of a proactive home retention program that will systematically modify troubled mortgages with up to $8.4 billion in interest rate and principal reductions for nearly 400,000 Countrywide Financial customers across the US.
- TD Canada Trust increases home equity line of credit and variable interest rate mortgage rates (CNW Group via Yahoo! Finance)
TD Canada Trust has increased its home equity line of credit and variable interest rate mortgage rates, effective October 7, 2008. While TD Canada Trust has endeavored to not pass on the increases in rates to its customers, this change reflects steadily increasing costs of funds in the current economic environment.
- Interest rate relief but not much (Adelaide Now)
HOME owners are likely to miss out on half the interest rate cut expected to be announced by the Reserve Bank today.
- BofA in mortgage lender settlement (Financial Times)
Bank of America has agreed to settle multi-state claims of deceptive and predatory lending practices against Countrywide Financial , the mortgage lender, in a deal that could result in a cut of up to $8.4bn in interest rate and principal payments for homeowners.
- Commonwealth cuts home loan rates (Daily Telegraph)
AUSTRALIA'S biggest mortgage lender Commonwealth Bank has reduced its standard variable home loan rate by 80 basis points to 8.53 per cent, passing on most of the Reserve Bank's cut in the cash rate.
- TD Canada Trust hikes variable mortgage rates, lines of credit (Canadian Business)
TORONTO - One of Canada's biggest mortgage lenders, TD Canada Trust, is increasing the interest rate charged for its home equity line of credit and variable-interest mortgages.
- Countrywide Settles Fraud Cases for $8.4 Billion (Update1) (Bloomberg)
Oct. 6 (Bloomberg) -- Countrywide Financial Corp. , the home mortgage lender acquired by Bank of America Corp. in July, will offer interest rate and loan principal reductions plus other distressed borrower relief valued at $8.4 billion to settle consumer fraud complaints from 11 states.
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