should you refinance your mortgage

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Refinance Your Mortgage


Obtaining a mortgage with a lower interest rate or lower

monthly payments can save you thousands of dollars over the

course of the loan.


What is Refinancing Your Mortgage All About?• Refinancing is paying off the loan you currently

have and taking out a new mortgage loan.• Your current loan gets paid off in the refinance

when you close on the new loan.• It’s usually easier to refinance than it is to acquire a

mortgage loan in the first place.


What is Equity?

Current value of home Minus What you still owe on it

Equity


What Does Equity Mean to You?

Your equity is what gives you all kinds of choices in refinancing your home.

Tip: Any time your equity is enough so that you’re financing less than 70% of your home’s value, it’s easier

to find lenders that will compete for your business!


Cashing Out Your Equity

When you receive cash along with your refinance.


Paying off your current debts and then making your new

mortgage payments on time will build some great credit!


Pros to Refinancing Your Mortgage

• You can lower your monthly payments.• You can lower your interest rate.• You can change from a variable interest rate

mortgage to a fixed interest rate mortgage.


Pros to Refinancing Your Mortgage• You can cash out your equity:

o Use the cash to pay off higher interest debts.o Consolidating your debts in this way means one monthly

payment instead of many.o You can pay cash for a major purchase instead of taking

out a higher interest loan.


Pros to Refinancing Your Mortgage

• You can raise your credit score.• You can receive some nice income tax

deductions…


Income Tax Deductions

• In the USA, if you itemize your deductions on Schedule A, you can deduct interest payments on your home’s mortgage from your income.

• Credit card interest, however, isn't tax deductible.

Meaning…


Income Tax Deductions By using your equity to pay off your credit cards

and putting that debt into your home mortgage, you’ve lowered the interest you pay on your credit card debt while, at the same time, making

it tax deductible!


Cons to Refinancing Your Mortgage

• You’re starting over on your mortgage, so it may take you longer to pay it off than if you had not refinanced.

• Your mortgage debt will be larger than before the refinancing, due to closing costs and if you take out some cash.


Cons to Refinancing Your Mortgage

• Your monthly payments may be larger than before if you cash out some equity in the refinance.

• With the new mortgage, you may be subject to early pay-off penalties if you wish to pay off a large portion in the near future.


How to Get Started

See a mortgage brokerto help you find a lender!


Modifying Your Current Mortgage Loan

• If the value of your home has decreased, consider modifying your mortgage loan.

• You may be able to lower the interest rate, your monthly payments, or even the principal on the loan by modifying it.

• However, trying to get a loan modification can be challenging!



1.Contact your lender to apply for a loan modification.

2.Keep in regular contact with them by phone and fax regarding the status of your loan modification request.


Modifying Your Current Mortgage Loan• Contact the department heads for the various

departments you work with as your application progresses.

• Send faxes to the specific departments requesting regular updates.

• Record your phone calls, if possible.• Write down the name of anyone you speak with, the date,

and a summary of each conversation.



• Utilize the internet for information on working with your lender!

Tip: With good communication and knowledge of how to help the process go smoothly, your loan modification can be a

success!


Self-Reflection Questions:

• Do I have a fixed or adjustable rate mortgage?• Is the refinanced rate low enough to justify the switch?• How much equity do I have in my home?• How long will it take me to “pay off” the costs of

refinancing and begin realizing my savings?


Self-Reflection Questions:• Do I plan on staying in this house for a long time or

will I be moving in the future?• Am I looking for lower interest, lower payments, or

to cash out my equity?• If I cash out my equity to pay off other debts, do I

have the discipline to stay out of debt once my current debts are paid? What will I do with my credit cards?


Action Tips:

• Research the terms of your loan to see if it’s worth shaking up the status quo.

• Estimate your home’s current value and determine if you have enough equity to give you some advantages in refinancing.


Action Tips:

• If you’re considering refinancing your mortgage, meet with a reputable mortgage broker to discuss your situation.

• After meeting with the mortgage broker, write down the pros and cons of refinancing your mortgage. This will help you make an informed decision to refinance or not.

should you refinance your mortgage

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