When does Home Mortgage Refinancing become the Best Option?
If you are faced by issues of foreclosure as many other people out there, you could join the bandwagon by opting for the conventional way of home refinancing to at least save your home from possible auctions. If you have been having late monthly payments or entirely missing your home mortgage payments for whatever reasons and are facing foreclosure possibilities, knowing the amount of money you could save through mortgage refinancing would definitely be a plus to your cause.
Basically, mortgage refinancing entails substituting your current mortgage plan with an affordable plan with favorable rates of interest and terms, thereby allowing you to manage the payments better each month without struggling. This is made possible because the home will be used as the collateral and the refinancing amount will not surpass your existing balance. As such, you can be bale to offset the remaining balance as per your current financial capabilities and what you will save you can then channel to paying off your other debts.
The amount of money you will save by mortgage refinancing could turn out to be a significant figure in the long-term. Say for example you gain circa 1% from your existing deal of half a million, this means therefore that by the end of one year, you get to save around $5,000 on interest alone, a figure that equates to $100,000 for a 20-year repayment period. These figures alone show that indeed it is beneficial to opt to refinance your home mortgage when you feel the urge to do so.
Other reasons why you should opt for mortgage refinancing include -- if you want to be able to save more money and at the same time pay less in your monthly remittances, or if you want extend the period at which you will pay for the mortgage. As long as you can handle high premiums each month, you could even reduce the period of your term. If you have a bad credit score and foreclosure proceedings are looming, no need to worry as the market has bad credit mortgage refinancing deals.
With that having been said, you should always be very careful to verify that the mortgage refinancing rates are indeed low when you opt to go the refinancing way, as they sometimes can exceed your current rates if you are not careful. The 2% rule applies here more than anywhere else – this rule indicates that you can safely refinance your home if the new rate of interest is at least 2% lower than the current rate of interest you are servicing. All the best in your efforts to fight foreclosure with one of arguably the best solutions in the market – home mortgage refinancing.