When taking a look at refinancing your home there are many factors to consider. Whether you’re refinancing to access funds for pleasure, an investment opportunity, debt consolidation or to help out someone you care about, I would take a look at the most common questions people have below.
– How much money will I save if I consolidate my existing debt? Credit card, car loans and lines of credit carry higher interest rates than mortgages. In many cases, this is a huge burden on your monthly cash flow. Refinancing your mortgage is often the best solution because interest rates are much lower than other credit products.
– How many years should I refinance for? Depending on your financial situation you may opt to increase your mortgage up to 30 years to keep your payments lower. You can then take advantage of prepayment privileges to increase payments or make a lump sum payment directly towards the principle.
– What will be the financial benefit if you’re using funds for investment purposes? It’s a good idea to find out from your mortgage professional what the interest cost will be on the funds you’ll be borrowing. This should be then factored into your projected margins.
– What will the total cost be? If you are in a mortgage term its best to find out how much the mortgage penalty will be to get out of your term early. We will also have to compare what you were paying for interest rate and what you’re going to be paying when you refinance.
– How much can I equity can I pull out of my home? In most cases, an appraisal will need to be completed. At most you’ll be able to refinance up to 80% of the value of your home.