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"Home loans can be confusing
With so many terms lenders are using
It becomes evident
Going from confused to confident
Comes from smart loan choosing."
If you are like most homeowners today, the home refinance world can look like Aliens from a different planet sometimes. Especially now with the changing landscape caused by record foreclosures and defaults. There's a major shift happening in the home loan industry. New methods, rules and terms on the horizon could further confuse the average homeowner and would be homeowner. In this week's newsletter I'll demystify the coming attractions of the home refinancing landscape. By knowing what's coming you can better prepare yourself to take advantage of the opportunities should you find a need to refinance. 1. Mortgage rate increases could suck away your equity. If you're depending on your home equity to pay for your child's college education, beware. Your plan could backfire. Higher interest rates could loom ahead and make borrowing expensive. It's always best to depend on a solid college savings plan. 2. Home Equity Savings Plan? Bad Idea. Treating your homes equity as a substitute savings plan can be risky. The best plan is to build your savings while you're building equity, this is a solid one-two punch. 3. Keep an eye and ear on interest rate trends Mortgage interest rates continually go up and down. A good rule of thumb is to remember a fixed-rate mortgage is best when rates are going up. Adjustable-rate mortgage (ARM) is better when rates are dropping. A good website to watch is
bank rate.com where you'll get the latest trends in interest rates in easy to understand language.
When is the best time to refinance? The best time to refinance can depend on many different factors. The main factor is will you be better off after the refinance than before. This can often be a tricky answer especially if you're thinking long-term. Of course if you're thinking short-term it always looks better when you have the cash or financing in your pocket. But two to three years down the road many homeowners regret refinancing at that time or at the terms they received. Here are a few rules of thumb to determine the best time. 1. Will you live in your house long enough to recoup the expense of refinancing. 2. Will you lower your monthly payment enough to recoup the expense of refinancing? 3. What will you use the money for? Hopefully something that will help to increase your net worth as opposed to consumable or depreciating assets. Learn the language of Lending The best way to understand the mortgage game is to understand the language. "It's surprising how many people seek mortgage refinancing without knowing many of the terms contained in the average mortgage contract", stated a prominent mortgage broker. Believe me you'll feel a lot more comfortable if you take the time to study a
sample mortgage contract (available over the Internet). Underline each word you don't understand and look up the definition. Do this before you start shopping for a mortgage.
Don't depend on the loan officer to explain all the terms during the application or closing. By taking the time to follow these common sense suggestions you'll transform yourself from a confused borrower into a confident mortgage consumer.
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If you're a single woman homeowner this information is for you. You don't need a man. This guide list quick and simple fix-it secrets. Your confidence will soar!
Copyright Black Homeowner News, Inc.
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