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Dumb With Refinancing
Explore The Right Refinancing Choices
Refinancing is basically taking out a new mortgage or loan to replace you current mortgage or loan. There are a number of reasons you would want to do this. Usually you can Refi for a better rate or just because you need more cash. When rates drop drastically take a look and do the math to see if it's worth your time.
Refinancing is one of those things that many people over look. In many cases, it can save you a bundle. Many first-time home buyers don't even know what it is. Until I purchased my second mortgage, I have to be honest, I wasn't sure of Refi-ing.
One of the things that most people forget is that when you Refinance your mortgage, there are closing costs attached to it. In most cases, close to $10,000 or more. For example you refinance a $200,000 loan with closing costs of $8,000. Now you owe the bank $208,000. Keep this in mind when you consider refinancing.
Here are the main situations that refinancing can save you a bundle:
1. Drops in interest rates-
The basic rule of thumb is that you need to drop interest rates at least a full point for it to be worth it. But, I have seen some great drops at 3/4 of a point.
2. Reducing Monthly Payments-
If you have a 15 year mortgage and you find yourself in a bad situation that requires you to find a way to save more, switching to a 30 year mortgage can greatly help you out.
3. Cashing Out Some Equity-
If you have high interest debt that is more than your standard home equity of $50,000, Refi-ing may be a way to change that to tax deductible debt at a much better interest rate.
4. Getting Rid Of PMI-
Private mortgage insurance is the bain of my existence. PMI protects the banks from complete loss in the event that a borrower defaults on the mortgage. Basically you pay to cover the banks butt. If you own less than 20% of your home, most banks require you pay for this. The biggest waste of money ever.
You should get rid of PMI ASAP! When rates take a turn for the better, you usually get out of this with ease. Here's the trick:
|Call the bank and say "I am think of Refinancing with another bank! The
rates are now swaying in my direction. Can you provide me any reason not
to leave?" They will schedule an appraisal for you right away that tell
you your house is worth more, so you have the 20% equity to cancel. In many
circumstances, they'll offer you a refi with low-low closing costs.
See if it's worth it for you. Here is a cool Refinancing Mortgage Calculator.
The thing you always have to remember is that no loan is forever, if you can pay it off or have some one else pay it off for you. Good a bad deal the first time? Refinancing might make it better.
Companies that just focus on refinancing cars are huge bottom feeder companies. They are the lowest of the low. In most cases, they are trying to take over your loan and really make you pay more money. Most of their clients either have bad credit or are having money problems. That's why most people refinance cars anyway. These lender preying on people who are having a rough time. In affect, making their situation worse.
Here is some ammo for you if you want to refi your car:
1. Credit Scores: They actually can clobber you. A low score means no one wants your business and your insurance will be a little higher.
2. No Appraisal - You don't need an appraisal to refinance your car loan. Some lenders will charge you a $200 few for some one to look in a blue. Tell them to kick that fee out or no deal!
3. Own a Home?- Try to roll your car loan into a home equity loan. The rate will be competitive and played right you can deduct the cost of the interest.
Because we all can be smarter with our money.