Factors to consider when refinancing your home

Lots of people see their mortgage as a lifelong liability. You sign just five years mortgage does not mean you are locked, with the cost of homes rising lots of property owners find themselves in “equity rich and cash poor” By refinancing your mortgage loan, you can use some of the equity and let it work for you. When you are considering to refinance your mortgage here are some factors to consider.



1.Low Mortgage Rates


When it comes to mortgages, is a cost first thing to take note; although interest rates may be currently historic low, who can say it will be the same rate in the next five years when your mortgage came for renewal? This is one of the main reasons why most homeowners go for the safety and security of a fixed five-year rate mortgage. You may be protected if you are into it, you might end up paying more than the normal rate.


Before refinancing your mortgage, it is quite necessary for you to know if it’s worth your time. With a closed mortgage, you will have to pay mortgage penalties to your bank. It is important to do the calculations to be certain that your savings offset your penalty charges.



2. Tap into Your Home’s Equity


Maybe you are thinking of adding a second floor to your bungalow for your growing family, or you need help to fund your retirement, the best option may be to refinance your mortgage. If you are refinancing your mortgage, then you can borrow up to 65 percent of what your home is valued. The better part of it is that you can do it without even selling your home.


When you decide to go for a Home Equity Line of Credit (HELOC as the short form), or you decide to blend and extend your mortgage, you can also take the advantage of better interest rates for as low as prime plus 0.50 percent. With interest rates today nearing a low record, there is no other better time to invest in your home!



3. Consolidating Your Debt


Do you have a problem with your debt? Do you still struggle to pay your bills? Then consolidating your debt may be the right solution. As discussed above, your mortgage is one of the best and affordable means of debt you can come across if you have a high-interest credit card, a car loan, payday loan.


When you decide to consolidate your debt, you can get the best from both sides. Your existing debts will have to be paid by your mortgage lender. Then after that, you’ll have to only pay for one month, so you won’t have to go through the stress of handling multiple bills.


A consolidated loan is not only convenient, but it can also save you lots of money. The interest rates on some store credit card are bit costly, with up to 30%. But with a consolidated loan, more of your money will go with the principal rate and less towards interest rates so that you can be free from debt sooner.


Taking the decision to refinance your mortgage can be good, but it is important to sit down and discuss with your mortgage broker. By considering all your options, you determine if refinancing would be best options for you.


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