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Home Mortgage

Basics of home mortgage

Does refinancing make sense for you? Refinancing only makes financial sense if it lowers your interest rate and reduces your monthly payments.  Used the wrong way, refinancing become the quickest route to financial ruin, destroying your existing equity, forcing you to pay off debt when selling — or even potential foreclosure if you are over-leveraged with multiple mortgages which you can't pay. That's why it's important to keep in mind that even when mortgage interest and corresponding payments are both low, debt it's still debt! It's still money that the you owe, and must pay back.

CRITICAL INFORMATION YOU NEED BEFORE REFINANCING?

Timing IS everything! Depending on your circumstances, some primary reasons to consider a home mortgage refinance package would be

• lowering your interest rate,
• lowering your monthly payments,
• reducing your term of the loan
• withdrawal of cash to pay off high, nondeductible consumer debt such as credit cards.

Look at the total picture of refinancing.

FIRST ask the lender to prepare an analysis to evaluate YOUR options. You should also be able to answer the following five questions before choosing a home mortgage refinance package:

1. Ask if the lenders period is long enough to recoup the costs of refinancing. If not, do NOT consider the home mortgage refinance  option

2. If your equity might be needed within the specified home mortgage refinance period to support medical or educational costs, then do NOT consider the home mortgage refinance package.

3. Will the refinance cash you are looking to borrow be used as an investment or luxury expense?  Unless it is an investment, it is advisable NOT to choose a home mortgage refinance option.

4. Do the benefits of the home mortgage refinance option improve your loan assumability and flexibility or do they make your selling options more limited?  After all, when you come to sell, you want to be in the driving seat when it comes to the asset decisions.

 5. Would a new home mortgage loan require additional costs or take on further accounting and taxation costs that weren't previously needed?

BOTTOM LINE: Your home equity is likely to be the largest personal asset and savings account you have.

The only way you can control this is by being fully informed about every aspect of your home mortgage refinance package.

"Don't think that the world is against you. Some smaller countries may be neutral" - Pat Williams