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Mortgage Refinancing Article
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The Risks of Refinancing
from:Refinancing your mortgage is a great way to achieve lower interest rates, build equity, and get some much needed cash. There are a number of benefits for those that go through with refinancing but much like a double edged sword, refinancing can cut deeply, usually into the wallet.
It is said that to make money one must take risks and while this may prove true and in many cases, these risks may also be too great and simply not worth it. So, before you refinance take all the risks into consideration and then make a decision that will not make your situation worse.
The most important thing to do is to read the fine print on your mortgage, this will pretty much tell you if you should refinance and if the risks are well worth it. Even if you have to find a high powered magnifying glass the effort is worth it. Some mortgages have penalties associated with early payment of the mortgage which can out weigh the profit you will receive from refinancing.
There are several things to consider before you go through refinancing; the amount of time you choose to spend in your home is an important consideration as this will determine if it is all worth while. If you refinance will you remain in your home long enough to break even and pay off the new closing cost? If this is the case, then you should go ahead and refinance. This can be determined by taking the profit of the new mortgage and dividing that number into the additional amount you owe. If you plan to move or sell your house before that time period expires then there really is not any reason to refinance your mortgage.
You will have to determine if you are going to refinance using a fixed mortgage or variable mortgage. A fixed mortgage keeps the interest rates at the same level while the variable can flux either up or down, at any given time. If you are going to own your home for decades then using a fixed mortgage rate to refinance will benefit you in the long run. If you plan to sell before interest rates have a chance to increase, a variable rate will be the best.
Another important factor to think about concerning the risks of refinancing is the reason you want to do it. Is the end result of such an action truly worth it? If you are planning to use the money you gain from refinancing as a way of quickly gaining cash to buy a boat, clothes, or to take a trip, you may want to rethink your plan. However, if you plan to reinvest the money or spend it on college or some other pursuit that will yield greater benefit and present little set back, then refinancing may be right for you.
Refinancing mortgages simply will not sit well with everyone's stomachs. And even if you find yourself with a seemingly perfect opportunity to lower your interest rates while keeping your monthly payments down, keep in mind everything that you are putting on the line. Weigh the risks and benefits carefully before deciding to refinance your mortgage.
Mortgage Refinancing Specific links
Mortgage Refinancing News
A Rush Into Refinancing as Mortgage Rates Fall (New York Times)
The Treasury?s efforts to jump-start the housing market led to a surge in mortgage refinancing activity, and officials are considering new ways to entice buyers.
Read more...A Rush Into Refinancing as Mortgage Rates Fall (The Sarasota Herald-Tribune)
The Treasurys efforts to jump-start the housing market led to a surge in mortgage refinancing activity, and officials are considering new ways to entice buyers.
Read more...Lower mortgage rates spur refinancing (San Diego Union-Tribune)
The housing market may finally be getting some much-needed relief, with lower mortgage rates already encouraging refinancing and Treasury officials considering ways to entice new buyers.
Read more...Mortgage Application Volume Doubled Last Week On Surge in Refinancing (Nasdaq)
(RTTNews) - Mortgage application volume more than doubled last week, as lower rates prompted a tripling of refinancing activity. Refinancing now makes up a significant majority of mortgage activity, as the housing market remains in a slump but home owners are able to take advantage of lower rates.
Read more...Don’t count on mortgage rates falling further (The State)
GREENVILLE — Lenders said Thursday that Upstate homeowners are backing out of mortgage refinancing deals after hearing of a proposal floated by lobbyists that could cut rates even more, even though the proposal might never come to pass. Bankers and mortgage lenders said they received numerous calls on the news that financial industry lobbyists are urging the U.S. Treasury to lower rates, ...
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