nemami.com

By Julian Lim

When you get ready to refinance house mortgages, you should take advantage of timing in order to get the best possible deal for your loan.

To refinance house loans is a big step, but one that is sometimes warranted for various reasons. Perhaps you want to reduce your interest rate because rates have dropped. Perhaps you want to reduce the length of time before your loan is paid off. You may want to put the equity back into the house that you own in the form of renovations or remodeling efforts. The important point to remember when you are considering refinancing is to find the best possible time for completing the refinance. The timing can be impacted by various factors, so review the clauses of the loan documents before signing.

Review Market Rates

Before you refinance house loans, you should be very comfortable with what to expect on the market rates for the refinance. There is no point in refinancing if you end up with a payment that is larger than the original unless it is offset either by an increase in house equity, or by a short loan term. Generally speaking, if the market rates are at least two percent below the original mortgage, it may be profitable to consider a refinance of your property. Even if you don’t have a market that is quite two percent below your original loan, it may be worthwhile to go ahead with your plans for refinancing.

Calculate your Savings

When you refinance house loans, the first step is to do the math in order to determine whether or not the numbers actually add up to a savings for you. Use software that is readily available on many web sites in order to review the amounts you will be paying, how long you must pay the installments, and the loan origination fees if any. There are many factors that can affect the potential savings by refinancing. It is important that you look at the big picture so that assumptions about savings don’t turn out to be a huge disappointment.

Income Expectations

The income that you expect to be earning in the future is another important factor for deciding on the right time to refinance house loans. Of course, no one ever expects their income to go down in the near future, so it is important to be really clear on what is realistic. Even if you don’t expect income to increase, it is wise to restructure your loan in order to take advantage of the rates if they approach your savings point. If your income is expected to go down, you may still want to arrange for a refinance of your mortgage loans in order to get better terms for payment.

Build Equity

Another reason you may want to refinance house loans is when you want to build equity. This can be done by improving the assessed value of your home through remodeling or renovation. The improvement in the value of your home will provide additional equity in your home. Of course, the additional equity is associated with the increased size of the loan against your home.

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