When would I refinance my Mortgage?
PEOPLE no longer look at a mortgage as being the one financial instrument that will remain untouched until the day finally comes when the last and final payment is eventually paid.
During the course of paying off a home today a mortgage may be refinanced for a variety of reasons so the question, ‘When would I refinance my mortgage?’ Is a quite valid and reasonable question to evaluate.
Reasons for Refinancing
It is even reported that the average term a person is keeping his or her home loan for these days is only four or five years. This indicates the amount of competition there is between lenders and it also indicates that the modern buyer is willing to ‘vote with his or her feet’ when it comes to ‘getting a better deal’.
Reasons given for people asking When would I refinance my Mortgage? include the following:
- Fear of defaulting: There is nothing to be afraid of in refinancing your mortgage if you are finding your current repayments too hard to keep up with. If you continue to ignore the fact that you are fast approaching the day when you will be forced to default on your repayment it may well be too late to do anything about it. You may then face the embarrassment of foreclosure.
- Better equity: Fast increasing house prices mean that in all probability the house you brought for $250,000 four of five years ago may well now be valued at $400,000 or even more. The question When would I refinance my Mortgage? Self answers if you want to take advantage of that considerable increase in equity.
- Renovation: When would I refinance my Mortgage? Should be given serious consideration when you are ready to carry out your plans to renovate. The first step would be to look at entering into a construction loan to help you with the renovation costs. In this manner you will only pay the interest on the construction loan while the reconstruction is taking place. Once construction is completed you would be wise to refinance again to consolidate the two loans into the one to minimize your interest payments.
- Flexibility: If it happened that when you took out your original mortgage you took out a rather rigid no frills document that kept repayment to a minimum. This was good at the time as you were probably younger with less disposable income than you have now. But circumstance change and you are now looking for a mortgage that gives you more, such as a redraw facility. A redraw facility will allow you to invest more into your mortgage each month but you will also be able to withdraw when the need arises. You can not do this with a basic home loan but you are ready now and the time has arrived to answer the question When would I refinance my mortgage? With the answer Now!
- Lower rates: Refinancing a mortgage simply to take advantage of a lower interest rate with another lending authority, during times when the Reserve Bank is lowering rates, is the most common cause of people deciding ‘When would I refinance my Mortgage?’ Although politicians sometimes advise people to do so, to punish certain lending authorities that are slow in lowering their rates under such economic circumstances, it is not always to your benefit to do so.
Interest rates vary from time to time and they can begin on an upward movement just as quick as they fall. But to refinance your mortgage on this basis is very expensive. You may well discover that the cost of doing so in the way of early payment penalties and the myriad of other costs and fees involved will turn out to exceed that of the extra interest payment you are trying to avoid so contact Home Loan Finder for help in making this important decision.
Related posts:
- Need to Refinance
- Refinance Options
- When Is It Time To Refinance Your Mortgage?
- House Mortgage Refinance
- Cash Out Mortgage Refinance
- Mortgage Refinance
- Best Refinance Company
- How to Refinance an Existing Mortgage with HSBC
- Interest Only Refinance
- Refinance Real Estate Loan
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