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Reassessing Your Home Mortgage Loan
Are you aware that on average Americans refinance their home mortgage loans about every four years? If you are in possession of your home for two years or more it is probably a good time to review your mortgage options.
As the years go by, your financial needs and priorities may change and ideally your home loan should change to reflect your new requirements.
By educating yourself with the help of Mortgages-Magazine.com, you will have the information required to find the mortgage best suited for you and be in a position to negotiate for better terms with your lender. You could now be in the position to:
-Lower your monthly mortgage payments
-Pay off your mortgage loan earlier
-Do the renovation project you always wanted
-Use the money to purchase an investment property
-Restructure your debt commitments
Be Aware Of Costs Involved In Refinancing Your Mortgage
Loan Costs
Make sure you know all the costs associated with getting out of your current loan and entering into a new loan. These costs include penalties for breaking out of your current loan, origination fees, credit reports and legal fees, and if required, private mortgage insurance and extra life insurance premiums. Only when you have all the costs associated with refinancing your mortgage and the monthly payment savings will you know whether it’s worth your while to go ahead with the new loan.
Be aware of all the costs associated with the early discharge of your loan. Prepayment penalties could be in the thousands. It depends on how long you had the loan and the percentage of the loan balance outstanding that has to be paid in the event of any early discharge.
Frequent Repayments
Paying your loan installments more frequently than on a monthly basis can generate interest expense savings for you by shortening the duration of the loan. Most lenders will allow bi-monthly or weekly repayments. The effect of more frequent payments is to progressively reduce the loan principal each time a repayment is made, thereby lowering the interest accruing each month.
Consolidating Your Debt
Substantial savings could be had by consolidating all your debt. The days of having a home loan, a personal loan, a car loan, a savings account, a cheque account and outstanding balance on credit cards are becoming a thing of the past. Financially, it makes more sense to consolidate all your loans. Home loan rates are significantly lower than those for personal loans, overdrafts and especially credit cards, but significantly higher than savings and cheque account rates. In the end, it makes sense to consolidate everything into your home loan account.
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