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Helpful facts for understanding
home refinance and tips
Home Mortgage Refinancing - Things To Consider When Looking To Get Cash Out On A Refinance
When you refinance your home mortgage, lenders often tempt you with the option of cashing out part of your homes equity. Cash at a comparably low interest rate may seem like a good option, but make sure you will financially benefit from it first.
Raising Your Homes Value
Only some home improvements raise the value of your home. Bathroom and kitchen upgrades are one example of this. However, with most remodel jobs, you will not see a financial gain. If you are using your homes equity to fund projects, make sure that your investment will pay off.
Saving On Interest Payments
Paying off credit cards with your homes equity will save you money in two ways. First of all, you will save on interest payments. Secondly, the interest you pay on your mortgage is tax deductible, unlike credit card interest.
PMI Penalty
Private mortgage insurance kicks in if you borrow more than 80% of your homes value. These extra payments can add up to several hundred dollars a year, so be careful how much you borrow. Other lines of credit may be more cost efficient when you factor in the cost of PMI on your mortgage.
The Length Of The Loan
While it may see smart to take out equity at a low interest rate with your mortgage, it may be cheaper to cash out through a home equity loan. Home equity loans allow you to deduct interest payments from your taxes, but they require a shorter repayment period.
Interest rates on a home equity loan are higher, so you will need to compare the costs between refinancing and a home equity loan. Generally, if your mortgage is long-term, a home equity loan is a better deal.
Your Financial Situation
To decide whether to cash out the equity of your home, you have to make decisions around what is best for your financial situation. There are no hard rules for this type of decision.
For example, purchasing a car with your homes equity may be a wise investment if you need a car and would struggle with a car payment. In the end, financial decisions are about making trade-offs.
About the Author
Carrie Reeder is the owner http://www.abcloanguide.com, an informational website about various types of loans. To view our recommended sources for refinance mortgage loans online, visit
this page: http://www.abcloanguide.com/refinance.shtml
More Useful Resource and Updates on home refinance and tips
- Deteriorating Home Market Puts GMAC Unit at Risk (New York Times)
GMAC, the finance company partly owned by General Motors, lost $2.52 billion in the quarter, hurt by the housing slump and vehicle lease write-downs, and said that its mortgage unit may not survive.
- Economy - Wednesday (Investor's Business Daily via Yahoo! News)
The Mortgage Bankers Association's index slid 20.3% to 379.9 in the week ended Oct. 31, the weakest reading since Dec. '00. Applications for loans to buy a home sank 13.9%, also to a near-8-year low. Refinancing demand fell 27.8%. The 30-year fixed-rate mortgage rose to 6.47% from 6.26% in the prior week. The 15-year fixed-rate mortgage rose 13 basis points to 6.14%. One-year ARMs fell 4 ticks ...
- Economy - Wednesday (Investor's Business Daily via Yahoo! Finance)
Mortgage applications dive. The Mortgage Bankers Association's index slid 20.3% to 379.9 in the week ended Oct. 31, the weakest reading since Dec....
- Keep Refinancing in the Family (Washington Post)
Q: I am looking into refinancing my adjustable-rate mortgage to a fixed rate. During this process, my mother told me that she would lend me the $150,000 to pay off my existing loan and that I could pay her back at the current market rate for a 30-year fixed mortgage. This would provide her a stable investment and I could forego the closing costs, paperwork, appraisal, etc., associated with ...
- Rising Mortgage Firm Is At Home In Tampa (The Tampa Tribune)
There's at least one mortgage company that still sees opportunity in the real estate market.
- Cerberus Said to Consider Giving Up GMAC (New York Times)
GMAC , the finance company jointly owned by private equity firm Cerberus Capital Management and General Motors , lost $2.52 billion in the third quarter, hurt by the housing slump and write-downs on vehicle leases, and said Wednesday that its mortgage unit, one of the nation?s largest home loan providers, might not survive.
- (AFX UK Focus) 2008-11-05 12:15 US mortgage applications slump, costs increase-MBA (Interactive Investor)
NEW YORK, Nov 5 (Reuters) - U.S. mortgage application demand skidded last week, driven by a nearly 30 percent slump in demand to refinance home loans as borrowing costs rose, a trade group said on Wednesday. The Mortgage Bankers Association's seasonally adjusted mortgage applications index, which includes both purchase and refinance loans, slid 20.3 percent to 379.9 in the week ended Oct. 31. ...
- New York, Seattle, Miami Home Foreclosures Increase (Update1) (Bloomberg)
Nov. 4 (Bloomberg) -- New foreclosures rose 50 percent in New York City and more than doubled in Seattle in October from a year earlier as falling prices and stricter mortgage standards kept homeowners from selling or refinancing, PropertyShark.com said.
- Bush Administration Works Toward Foreclosure Prevention Plan (Fox News)
Sources close to the policy process tell Fox Business that the Bush Administration is considering improvements in the Federal Housing Administration?s ?Hope for Homeowners? program, to make participation more attractive to banks, thrifts and other mortgage holders.
- US mortgage applications slump to 8-yr low (The Economic Times)
US mortgage application demand skidded last week to an eight-year low, driven by a nearly 30 per cent slump in demand to refinance home loans as borrowing costs rose.
- Wells Fargo Home Center - Refinance Tips
Should you pay points? We'll help you make an informed decision on how to structure your refinance. ... Refinance Tips. Home Loans. Apply Now ...
- Countrywide - How to Refinance Home Loans and Mortgages
Refinance home loans, consider refinancing options, speak to a loan advisor and ... process, plus pick up valuable home ownership tips you can use right now. ...
- Refinance Tips for Home Owners
Refinance Tips. ... E-LoanCentral is the smart and easy way to get YOUR loan. Refinance Tips: Is now a good time? Things You Should Know ...
- Tips - HomeStreet Bank
... to refinance your home, but before making the decision to refinance, please review these tips and speak to your Affinity Loan Officer. ...
- Vehicle loan shopping tips from E-LOAN.
Apply today and drive off today with our exclusive electronic document process. ... Loans - Purchase Mortgage Refinance ARM Mortgages Home Equity Loans Auto Loans ...
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