Thursday, May 27, 2010

Learn If You Should Refinance Your Mortgage?

If you've ever asked yourself the question, "Should I refinance my mortgage", the answer is, you should DEFFINTLY look into it. Not only could it give you more to live on month to month, but it could also save you thousands off your loan in the long run.

A recent survey produced some disturbing results on the state of mortgages in the United States. The report showed that more then half of property owners are either paying too much for their mortgages or are locked into mortgages that are clearly unsuitable for their needs, income level or financial goals. "Should I refinance my mortgage" is clearly a questions more americans should be asking themselves.

Research also indicates that the average percentage of some ones income that goes to mortgage repayments has risen 12.6% from ten years ago. That's not leaving today's property owners much to live on.
If you don't relate to these circumstances, there are plenty of other reasons why refinancing could still be in your best interest.

Let’s face it, things have probably changed in your life since you originally obtained your home loan. What worked for you then might not be working for you now. Refinancing allows you to change the terms of your mortgage to suit your lifestyle now.
Here are the main reasons why you should look into refinancing.

Save thousands:
It is possible to pay thousands less on the life of your mortgage by refinancing to a better deal. Whether you are able to secure a home mortgage with a lower interest rate, fewer fees or more features to repay quicker, saving money in the long run is a real possibility.

Lower your monthly payments:
Are you struggling to pay your monthly mortgage payments? Well, aside from changing to a lower interest rate, there are a few other options. One is to refinance the remaining principal at the original length of the loan. For example, say you borrowed $200,000 on a 25 year term and you are 10 years down the track with only $125,000 left on the mortgage. If your monthly payments are too much, refinancing the $125,000 back on a 25 year term loan will greatly reduce them. If it relieves you of the stress of meeting your bill month to month it could be a very worthwhile option.

Consolidate your debts:
Are you struggling to manage your debt? Paying way too much in interest? One of the easiest ways to handle credit card and high interest debt is to refinance it into your mortgage. Simply refinance what you owe in total, including credit card debt and all other high interest loans, and only pay the low interest rate incurred by your home mortgage. Let’s say you still owe $100,000 on your home mortgage and in addition owe $20,000 in other debt. You then refinance for $120,000. This way you can pay off the $20,000 that was incurring a high interest rate, at the low rate of your home mortgage. Not only will this ease your financial situation, it will save you a lot of money from interest you now no longer have to pay.

Provide spare cash:
Do you need some money? Want to renovate to add value to your property and/or improve your living arrangements? Well, refinancing is a great way to gain access to the equity sitting in your home. Consider a switch to a Home Equity or Line of Credit loan as a way to do this. This would allow you to renovate your home, buy that new car, or do anything you like with the money.

Pay off your home mortgage sooner:
Want to own your home as soon as possible? Or have you had an increase in salary and want to get your money working more effectively for you. Why not refinance to a 100% Offset or an All in One home loan? These types of loans can greatly reduce the amount of interest you pay on your mortgage. In addition to this, the option to pay more each month can greatly reduce the time it takes you to own your home.

Gives you flexibility:
Want options? Need to minimize how much you pay each month and have the option to borrow more when you need it? Then consider refinancing to a Line of Credit loan. Mainly an Interest only loan, this allows you to tap into your equity, and will give you ultimate flexibility with your finances.

Increases your financial security:
Worried about interest rates rising? If you’re on a Adjustable Rate home loan you might want to refinance to a fixed rate loan. This will give you peace of mind and financial security, especially in volatile times knowing that your monthly payments will remain the same.

Provide Opportunity to invest:
Want to invest? Get your money working for you? By refinancing you can gain access to the equity you have built up in your home. A switch to a Home Equity or Line of Credit loan would allow you to draw on the equity you have built up. You would then have the money you need to invest.

So you can see why there are many reasons why refinancing can seriously benefit you. Next time you ask yourself the question: "Should I refinance my home mortgage?", you owe it to yourself to check it out. However the ultimate answer to the question is in the maths. If the numbers add up, and are in your favor, then it is obviously worth it. Use our refinance loan calculator to if you will benefit from refinancing your mortgage.


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