The term mortgage, usually conjures images of piles of paper work, stuffy banks, and bottles upon bottles of aspirin. With a little work and a bit of research and maybe one or two those aspirins, the perceived quagmire of mortgages can be successfully navigated benefiting you and your home.
More then likely if you own your home, you also have at least one mortgage and like most your mortgage is too costly and the time you have to pay on it is too long. A popular way to remedy this is by refinancing your mortgage which is becoming all the more popular and common these days. Basically, refinancing your home mortgage is the act of taking out another mortgage in order to pay off your old one. Ideally, and really the only way refinancing will work in your favor, is for the new mortgage to have a lower interest rate and a shorter period of time that you will be paying on it. So, you pay off your old mortgage which can result in a profit for home repair, and are left with a new mortgage with more favorable terms.
More favorable terms are not the only reason to refinance. Some home owners find that there are plenty of benefits to refinancing beyond better terms and money for home repair. Other advantages can include a lower interest rate, gathering equity quicker, and the chance to benefit from an improved credit rating.
When you lower your interest rates through refinancing you have the ability to also lower your monthly payments which means more money. Having more green is always a benefit and that money can go towards improving your home or adding to your savings.
Home equity is extremely important to home owners, especially to those that use their home as a primary investment. So, gaining more equity is a great benefit of refinancing your mortgage.
A bad credit rating, used to be a death sentence for potential home owners. However, now there are several ways for anyone to gain a mortgage even if they lack that perfect credit score. Often times, home owners with a bad credit rating will be stuck with higher interest on their mortgage. Luckily, credit can improve over time, and for home owners who find that they are now eligible for a better mortgage this can be great news. They can refinance their old mortgage and take advantage of their new credit score.
Not everyone is eligible to refinance their mortgage and there certainly is much to consider when deciding to refinance. You will have to weigh the good with the bad, consultation with financial advisors will be required and long term planning on your part is necessary. However, if you feel that refinancing your mortgage is worth the effort then play it smart and take it slow. The benefits of refinancing can greatly aid in improving your home and your life.
Refinancing a mortgage is often a smart and practical way of saving money, gaining equity, and paying off debts. When interest rates are on the decline refinancing becomes more popular. When you refinance a mortgage you take out a new mortgage and pay off the old one, the refinanced mortgage is at a lower interest rate and usually has better terms. Refinancing has the possibility of saving the home owner hundreds of dollars depending upon his or hers financial status including credit scores, payment history, and other factors. Refinancing your mortgage can be of great benefit as long as the new interest rate is at least two points lower then the old one.
There are several ways to go about getting your mortgage refinanced. Taking out a FHA loan is just one option.
The FHA, or Federal Housing Administration was created as a direct result of the Depression. In an attempt to curb the effects the Depression and the crisis it put on many home owners, the FHA developed a way for home owners to refinance even if they may not have been able to afford it on their own. This loan pretty much guaranteed that the home owner would be able to refinance by insuring the lender that if something should happen, like a default in payment, that the lender will be able to receive their money back.
Now, there are several benefits of using a FHA loan which makes it far more desirable then traditional refinancing loans. The qualification process is quicker and easier than traditional loans, which means that you will be able to get refinanced with very little fuss or muss. This is due to the fact that the FHA guarantees your loan so lenders do not really have anything to loose should you go into foreclosure.
Bad credit is not really an issue with an FHA refinance loan. This goes back to the first point that the loan is guaranteed so the lender will be able to refinance even if your credit score is less then ideal.
Less money out of pocket, is always a great reason for pretty much anything, and a FHA loan will be able to get you a lower down payment for refinancing. Where traditional loans require a down payment up to and possibly exceeding 20%, an FHA loan can be as low as 3% leaving you with more money to maybe fix up the home the way you want it.
Another benefit of a FHA loan is perhaps the most appealing, lower interest rates. Low interest rates are the main reason people refinance their mortgages in the first place, so the possibility of receiving rates that are even lower then the market price is of great interest and benefit.
The FHA is able to give refinancing so many perks and benefits because they are backed by the Federal government which provides little to no risk to lenders. Almost anyone can qualify for a FHA loan, which can be used to refinance their mortgage; all it takes is a few phone calls.
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