If you are thinking of ways on how to clear up some of your debts, then it’s time for you to try home mortgage refinancing. Taking advantage of this chance is good for you because:
- You can get a chance for better home loan interest rates
- Monthly payment terms can be reduced, especially when you try long-term contingency plans with low interest rates
- You’ll be able to combine all your debts into just one loan
- And risks can be altered or reduced, which is extremely beneficial for you
In short, refinancing will help you manage your debts easier and will also help you pay off your remaining debt over a longer period of time so that you would not feel like you are being pressured. You might also be given the chance to pay fewer taxes than what you think you should pay which will help you deal with your financial situation even better.
Another advantage of refinancing right at this moment is that you get to take advantage of 30 year fixed mortgage rates today. If not, then maybe you can check out offers of 15 year fixed mortgage rates. What’s good about these rates is that the rates do not change overtime.
No matter what happens with the economy in the next 15 to 30 years, you can be sure that you’ll only be paying for the rate that you set initially. You can just allot the said amount of money for each time you have to make your mortgage payment. This way you won’t have to worry about whether you were able to save enough or that your payments will increase.
If you live in the US, you are at an advantage because Fixed Rate Mortgages are not that popular in many countries. In fact, there aren’t any fixed mortgage options at all in some countries.
Fixed Rate Mortgages aren’t tied to an index, unlike adjustable mortgages. The US Federal Housing Association made use of fixed rates so that people will not have a hard time paying their debts, especially those in lower or middle class families. There are also 40 to 50 year mortgages available where your individual payments are smaller you pay for a longer period of time. They also made available what is called an FHA loan (a government backed loan) that allows for a down payment as little as 3.5%.
This way, people will be tempted to get some plans from lenders because they know that it would be better to start paying debt minimally even if it will take them a while than not paying their debts at all.
What about Home Equity?
By refinancing right now, you can also take advantage of home equity interest rates while they are still low. Signing up for a plan such as this will help you get available equity by the form of a single payout making it easier for you to pay off your mortgage. Us it to reduce your total debt significantly and then just pay the remaining balance by refinancing.
However, you may not appreciate the fact that once you try refinancing, you may not be able to borrow funds again even if you have already paid for the first amount that you have borrowed. You should do your homework on the pros and cons of home equity first before filling out applications or signing any papers.
What if You Have Bad Credit?
Some people are afraid of applying for loans or even refinancing because they may have bad credit mortgage rates. Well, it’s actually not the end of the world because when it comes to home mortgage refinancing, there are generally always second chances. However, there are just some things that you have to keep in mind, such as:
- Check your credit report – Your credit score is not the only factor. Your credit history and payment responsibility are also critical in applying for a loan, and this will be scrutinized by your potential lenders. The more you are aware of the details, the better prepared you can be to answer questions your lender will have.
- Utilize government programs – More often than not, they give the best deals.
- Look for a co-signer or guarantor – Remember not to just let anyone sign though because in case you don’t pay your credit, this person will be held responsible. Be mature enough to pay your own debts.
- Accept increased rates – You may have to pay higher a interest rate as you have not been paying the main debt for a while, but don’t worry because more often than not, it is just a minimal amount and it always depends on the loan program or on the lenders.
- Have proof of a steady income – Be able to show that you have a positive cash flow to dissolve your debts over time.
- Reduce your current outstanding debt – Pay off all your other debts so that you can concentrate on the mortgage.
- Provide a significant down payment – Your monthly fees can be reduced and your overall borrowing principal is smaller and more appealing to your potential lenders.
- Protect your identity – Banks have cutting edge technology to prevent fraud before serious damage can take place, but being proactive about preventing identity theft and securing your finances shows responsibility.
Have a goal and stick to it
As with everything in life, if you want to ensure the ability to keep your home for the rest of your life without risk of foreclosure or repossessions, you need a goal for paying your debts and keeping them manageable in the future.
By trying home mortgage refinancing right now, you will be able to breathe a sigh of relief as it is a chance for you to redeem yourself and make sure that you get to pay your mortgage. Remember, being homeowner comes with responsibility and certain obligations.