Things to Know About Refinancing a Home Loan

Thanks to extremely low mortgage rates and a tight housing market, refinancing and staying in your current home can be good for your budget and your sanity. With home mortgage refinancing solutions, you can wipe out high interest debt, shorten the term of your fha mortgage, get rid of PMI, or lower your mortgage payment. If you will like to learn more tips the best would be to find a mortgage broker in Auckland and ask for consultation.

Debt Consolidation

If you have credit card debt and are ready to get rid of the credit cards, or to use them less, then a refinance can be an excellent choice. Because the value of your home may have gone up recently, you could have more equity than you did.

By refinancing to pay down debt, you could

  • reduce the amount of unsecured debt you’re carrying
  • lower the interest you pay each month
  • have more room in your budget for savings

Before you take this step, take a hard look at your credit card usage. If you’re going to pay them off only to charge them up again, don’t refinance. If you’re going to pay them off and put them away, living off your debit card instead of taking out another loan with each trip to the grocery store, a refinance is a very good idea. Then if you consider using a consolidation debt loan than using a credit card, look for and let them help you with this.

Lower Your Mortgage Payment

If the rest of your budget is in good shape but you’re interested in making more space in your monthly outgoings, a refinance can help. For example, if you’re 5 years into a 15 year mortgage, it may have been a good idea to have a higher mortgage payment for the last five years.

As a lot can change in five years, you may be ready for a lower mortgage payment. You can keep more of your monthly income with another 15 year refinance of the remaining balance, or you can really stretch it out and take on a 20 or 30 year mortgage. In these cases, the affordability of your new Firstxtra mortgage will determine the term.

Get Rid of Private Mortgage Insurance

If you have paid down at least 20% of your loan principal, consider applying for a conventional mortgage. An FHA backed mortgage is an ideal way to get your financial foot into the housing market, but these loans are loaded with small fees.

To reduce these fees, a conventional mortgage that covers only 80% of the value of your home means that you don’t have to pay the

  • PMI premium of 1.75 percent
  • annual premium of .85 percent

Do be aware that you will have to have your credit in decent shape before applying for a conventional mortgage. If you’re not sure you will qualify, consider a refinance at that will allow you to wipe out other debts, lower your monthly expenses overall, and get your budget in better shape while the rates are low.

Owning a home is an ideal way to build wealth over time. If you choose to refinance to pay down debt and lower the interest you pay overall, do your best to reduce your credit card use to avoid building up more unsecured, high interest debt. If possible, have a budget in place built around your new mortgage payment before you complete your refinance. Other people also consider talking about loan modifications to reduce their monthly payment to an amount they can afford. Check out these bank statement loans in California which offers one of the best rates.