Refinance > Why Refinance Back into a 30-Year Loan?

Why Refinance Back into a 30-Year Loan?

(ContentDesk) August 11, 2005 -- By Jansen Drake, CMS1st Metropolitan MortgageMarietta, GA ? One of the biggest reasons homeowners refinance their mortgage is to obtain a lower interest rate and lower monthly payments. By refinancing, the borrower pays off their existing mortgage and replaces it with a new one. This can often be accomplished with a no-points no-fees loan program, which essentially means at "no cost" to the borrower.In the no-points no-fees scenario, the mortgage consultant uses rebate monies paid by the lender to pay off non-recurring closing costs for the borrower. These are "one time" fees such as escrow or attorney fees, title insurance, document preparation, tax service, flood certification, processing and underwriting fees, etc. The borrower is still responsible for recurring fees such as interim insurance, property taxes or insurance policy payments.

Refinancing typically occurs when mortgage interest rates drop significantly, but borrowers with recently improved credit scores (from paying off credit card debt, making mortgage payments on time, etc.) are often candidates for better interest rates as well. If you haven't checked your credit score in a while, it's a good time to call a mortgage consultant.The question most asked is, "But why should I go back into a 30-year loan?"There are two schools of thought on this subject, and the mortgage consultant should work hand-in-hand with the borrower's financial planner to determine what works best for their mutual client.One option is to take the route of the "same payment" refinance, and actually pay off the loan faster and save money on interest fees in the long-run. If refinancing results in a lower monthly payment, the borrower can still continue making the same payment they made in the original loan, and the extra money will be applied to the principal balance. For example: Let's say you have 25 years remaining in your current loan, and you refinance back to a 30-year loan with a slightly lower interest rate, resulting in a payment reduction of $200 per month. (Note: This is just an example.

The actual amount could vary.) You could then take that extra $200 per month and apply it toward the principal on the new loan. At this rate, the loan will be paid off in 22 years and 4 months, which is 2 years and 8 months less than the original loan.On the other hand, if the borrower's financial planner is a proponent of best-selling author and investment guru Douglas Andrew's philosophies (see Missed Fortune), he or she may suggest investing the extra money in a side-fund that could earn a better rate of return and grow to the amount of the mortgage (and beyond) in even less time. This method provides excellent liquidity, but having more direct access to this money may be too tempting for some homeowners.Regardless of the reason for the refinance, the mortgage consultant will need to know what the existing loan scenario entails, review the homeowner's long-term goals, and provide a comprehensive spreadsheet that compares and contrasts the various loan programs available. Bear in mind, refinancing to obtain a lower interest payment could also result in a lower deduction at tax time. The homeowner's mortgage consultant and financial planner should work hand-in-hand with their mutual client's best interest in mind.Jansen Drake
is affiliated with 1st Metropolitan Mortgage, a Georgia Residential Mortgage Licensee.

For free consultation and a copy of The Certified Guide to Credit Scoring, call Jansen
at 678-388-1755 or go to www.catquickloans.com.

To Refinance...or Not, That Is The Question???

What does it mean to refinance? Why would someone want to refinance? There are many cases when a person would refinance. When we use the term refinance, we are typically referring to a loan such as a car or house loan. It may also be a business loan. For the purpose of this article, we are going to discuss the home loan but most of the same rules of refinancing apply to other types of loans as well.
Refinancing your home can be defined as the process of applying for a new mortgage, and using the money you receive to close out your older mortgage.

Many homeowners already take full advantage of this, because they are sometimes able to find a mortgage loan at a better interest rate. With the help of this, they can pay off their mortgage much sooner, and ultimately have a lower amount to pay back.
Because a refinance plan essentially amounts to taking out a new mortgage and closing out the former mortgage, the steps involved resemble those involved in taking out...

To Refinance...or Not, That Is The Question???

Refinance > To Refinance...or Not, That Is The Question???

Refinancing Your House - How To Know Whether To Refinance Or Get A Second Mortgage

Refinancing your house's mortgage is not the same thing as getting a second mortgage. While both allow you to cash out your home's equity, terms and rates differ between the two types of loans. To know which financing option is best for you, learn each loan's features and pick the one that best meets your needs.Refinancing Your MortgageTraditional refinancing is basically replacing one mortgage loan with another. Typically, refinancing lowers mortgage payments through lower interest rates or longer loan terms. You can also cash out part or all of your home's equity while refinancing.

Refinancing requires paying closing fees. To recoup these costs, you usually need to stay in the house for a couple of years. However, you will save money with better terms than if you choose a second mortgage. Second Mortgage OptionSecond mortgages, also known as home equity loan, have slightly higher rates than mortgages, but you have less or no closing costs. Second mortgages also only charge interest...

Refinancing Your House - How To Know Whether To Refinance Or Get A Second Mortgage

Refinance > Refinancing Your House - How To Know Whether To Refinance Or Get A Second Mortgage