Are you planning to refinance your mortgage? If so, here are some important factors to consider before getting a new loan.
What is your purpose for refinancing?
Refinancing is a type of debt you will get. So, it is important to determine the whys and wherefores before securing it.
People often decide to refinance their mortgages because of the following reasons:
- Lower the current interest rate. Lowering your mortgage by two percentage points can make a noticeable difference in your portfolio. So, if the original mortgage rate is higher than your refinancing option and the monthly payment will be lower, then you might consider refinancing.
- Pay for the closing costs of the original loan. Homeowners who do not have the funds to bring to the closing table can transfer the closing costs of the initial loan to the new loan.
- Invest into retirement. Homeowners who are nearing g retirement can take advantage of short-term refinance mortgages. They can use the proceeds of the loan to invest into diversified portfolio. While it is not advisable for those who largely depend on the market for retirement income, retirees with steady flow of income and large pension don’t have to worry. After all, increasing the amount of your financial can help you generate growth even after retirement.
Other viable reasons include managing your credit to improve your credit scores, changing loan type, shortening loan term, and getting cash for home improvement. You can also access the equity in your home to cover important personal expenses and deal with life changing events such as wedding, divorce, sickness and financial losses. Refinancing is also a good option for those who plan to consolidate their debts and use cash-out refinance to pay for credit card debts with high interest.
In short, refinancing is a good option for people who need instant cash, and those who want to get out of debt fast, reduce their loan payments, strengthen their portfolio and invest into the future.
How long will you stay in your house?
If you don’t see yourself staying in your property for the next 15-years, or so, when your loan term is longer, then refinancing may be a costly choice for you. Aside from the fact that you cannot move anytime soon, the closing costs would outweigh the savings you accumulated from refinancing your mortgage.
What is the value of your home?
The cash you can get and the interest rate depends on your home’s value. Talk to a licensed appraiser to determine the value of your home, so you can decide whether or not you can make some improvements to increase its value and the chance of getting refinanced.
What are your options?
While traditional financial institutions offer refinancing products, an experienced and highly reliable alternative lender like Australian Lending Centre can help you find the most suitable loan products, based on your needs.
You can talk to our refinance specialists to get the best interest rates, regardless of your credit history and financial standing.