Tehama Country Real Estate

Tehama Country Real Estate – DETERMINE THE BEST TIME TO REFINANCE A M O RTG AG E R rating is better now than it was when you initially earned your home loan, then this might be a good time to refinance. Not only will a person benefit from a low market rate, the interest rate may be even lower because lenders look more fondly on you now than they did years ago. mprove the value of the home and property. It is important to Lenders will frequently Lenders often base their assessadvertise that "now"is the time ments of borrower reliability to refinance, but people may and stability on those potential want to get all of the facts borrowers' credit scores, so a before making their decisions. strong credit score makes you look better in the eyes of A low interest rate is not realenders. Borrowers with poor son alone to refinance. Convencredit ratings may not benefit tional wisdom has long sugfrom refinancing. gested that borrowers wait to refinance until interest rates *Income: Aperson's debt-todrop 2 percent below their curincome ratio is another factor in rent rate. While a low interest determining mortgage interest rate is important, there are sevrates and approval. A positive eral other factors to consider. change in income status as well as reduction in debt could * Closing costs: Refinancing a make it a good time to refihome is an expensive undertaknance. ing. While it can effectively shave $100 or more off your * Adjustable rate mortgages: monthly payments, there is a Many people opted for financial outlay during the adjustable rate mortgages process, which includes closing when buying homes years ago. costs. A person can expect to Over time, their monthly paypay anywhere from 2 to 5 perments may have increased concent of the loan's value in clos- siderably, making it nearly ing costs when refinancing. impossible to afford a home. Lenders used to enable some to Refinancing for a fixed-rate roll the cost of the closing into mortgage, regardless of the curthe mortgage, but stringent rent interest rate, will likely rules have changed the way ease some of your financial burmany banks now do business. den. If the finances are simply not *Home value: A higher home there to cover the closing costs, refinancing may not be an value means more equity in the home. This money can be used option. to pay down debt or for home improvements that further i *Credit rating: If your credit * Interest rates: Lower interest rates often motivate homeowners to refinance, as a lower interest rate can save homeowners a substantial amount of money over the course of their loans. However, refinancing too soon (within 4 years of the original home loan) may put homeowners in a negative light. Lenders may see borrowers who refinance too soon or too frequently as risky borrowers who cannot successfully manage their money. efinancing a mortgage is advantageous to homeowners for a variety of reasons. The primary reasons people refinance their mortgages are to reduce their monthly payments or free up equity to use toward home improvements or other necessities. speak with a real estate professional to determine if home values have spiked in a particular neighborhood and to gain an accurate appraisal of the home. This will help determine if refinancing is frugal. * Prepayment penalties: Certain mortgages have prepayment penalties built in. Should a person pay off the mortgage too early, usually within two to five years, 2 to 4 percent of the home's loan value must be paid out. Refinancing counts as paying off one loan and opening up another. Penalties could deter a person from refinancing too soon. Determining the best time to refinance your home mortgage takes effort on the part of the borrower and information about market trends. By doing one's homework and being aware of certain factors, a person can save money by refinancing a home loan. 3

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