Smith Business and Finance

Refinancing your mortgage can mean great savings for you and your family. Replacing your existing mortgage with a lower interest loan, changing the term of your loan, or even consolidating all your debts into this new loan could save you money, both monthly and over the life of the loan.

The rule of thumb is when interest rates are 1.5 to 2% lower than you are currently paying on your mortgage, it’s time to consider refinancing.

Would Refinancing Be Worth It?

Refinancing can be worthwhile, but it does not make financial sense for everyone. There are a number of items to consider, such as how long you plan to stay in the house. Most sources say that it takes at least 3 years to fully realize the savings from a lower interest rate, given the costs of the refinancing.

Refinancing can be a good idea for homeowners who:

* Have an adjustable-rate mortgage (ARM) and want a fixed-rate loan to have the certainty of knowing exactly what the mortgage payment will be for the life of the loan.
* Want to build up equity more quickly by converting to a loan with a shorter term.
* Want to draw on the equity built up in their house to get cash for a major purchase or for their children’s education.

What Are the Costs of Refinancing?

Costs can vary significantly from area to area and from lender to lender, so the following are estimates only. Your actual closing costs may be higher or lower than the ranges indicated below.

Application Fee  $75 – $300. This charge imposed by your lender covers the initial costs of processing your loan request and checking your credit report.

Appraisal Fee   $150 – $400. This fee pays for an appraisal, which is a defensible estimate of the value of the property.

Survey Costs  $125 -  $300.

Homeowner’s Hazard Insurance   $300 – $600.

Lender’s Attorney’s Review Fees  $75  – $200. The lender will usually charge you for fees paid to the lawyer or company that conducts the closing for the lender.

Title Search and Title Insurance  $450 – $600. This charge will cover the cost of examining the public record to confirm ownership of the real estate, and the cost of an insurance policy.

Home Inspection Fees  $175 – $350.

Loan Origination Fees  1% of loan. The origination fee is charged for the lender’s work in evaluating and preparing your mortgage loan.

Mortgage Insurance  0.5% – 1.0%. Depending on the type of loan you have and other factors, another major expense you might face is the fee for private mortgage insurance.

Points  1% – 3%. Points are prepaid finance charges imposed by the lender at closing to increase the lender’s yield beyond the stated interest rate on the mortgage note. One point equals 1% of the loan amount.

Prepayment Penalty. A prepayment penalty on your present mortgage could be the greatest deterrent to refinancing. The mortgage documents for your existing loan will state if there is such a penalty. In some loans, you may be charged interest for the full month in which you prepay your loan. In the future, always make sure there is NO prepayment penalty.

In Conclusion

A homeowner should plan on paying an average of 3 – 6 % of the outstanding principal in refinancing costs, plus any prepayment penalties and the costs of paying off any second mortgages that may exist.

Whether or not that is a wise decision is purely a numbers matter.

When you bought your own car, you might not have found the best financing deal. You could have taken out your car financing through a car dealer at an interest rate that is possibly higher than other financers. This could be one of the reasons why you are currently paying way too much your current car loan. If your credit has not been in tip-top shape, you could be paying a higher interest rate as penalty. If so, then it’s high time you looked into refinancing.

Car loan refinancing is fast and easy. Once your car loan refinancing application has been approved, your current loan will be paid off by the new car finance company. You will be making payments at a lower interest rate than you have been previously paying. You’ll be surprised at how much you will be saving on car loan refinancing. Your savings could amount to hundreds, even thousands of dollars over the course of the loan, depending on how much your new interest rate is charged on your car loan refinancing deals.

Car loan refinancing may be a very promising way of saving you money but most people have not thought of refinancing their cars. You can say that car loan refinancing works in the same way as home refinance. In car loan refinancing, you pay off your current car loan with a refinancing car loan.  This time the loan comes from a different lender with a lower annual percentage rate, making your monthly car loan payments much less with interest rates that have dropped, while allowing you to pay off the balance of your car loan in a shorter span of time. Car loan refinancing has become a very popular trend because of the dropping interest rates. Use the money you save through your car loan refinancing to pay off credit card debt or accelerate your car loan payoff.

This is exactly the reason why people with bad credit who are paying a high APR need to apply for a car loan refinancing with low APR. Most bad credit borrowers can indeed refinance to a lower APR but many don’t think to try because they were “programmed” or duped by the dealer into thinking they are stuck at the higher APR they have imposed.
It’s very important to have a car loan refinancing early, because with car loans, the interest is mostly paid in the earlier payments.  The earlier your car loan refinancing is approved, the more money you save.  If you wait until the 4th year to refinance your car loan, your savings will be a lot less.

How much is the ideal APR for a car loan refinancing? If you didn’t get 0% to 3% APR car loan from a dealer or bank, you should consider a car loan refinancing. Even if you got a decent APR auto loan, consider having a car loan refinancing. Most online car loan refinancing sites have a car loan calculator.  You’ll be surprised at how much money you can save just by lowering your interest rate. Refinance your car loan today!

There are a number of mortgages out there that give you low payments each month. Some of these mortgages, such as interest only, adjustable rate mortgages, and a few others, gave you the low payment up front – but it was at the expense of building up your equity. Here is how refinancing your mortgage can enable you to start building up your equity faster.

Equity is the amount of cash you have available after you have lived in your home for some time. It is the difference between the current value of your home and the amount you still need to pay on your mortgage. Mortgages that allow you to make low payments up front, though, usually will use your cash to pay the interest – and it does not reduce the principal much – if at all. Your equity, however, can only be built up when you pay down the principal.

This could leave you with a couple of options if you want to build up your equity quicker. The first option would be to put down a large chunk of cash at one time. Most of it would be applied to your principal. Most people, however, do not have the opportunity to do this.

A second option would be to refinance your mortgage. If you watch the market and apply when the interest rates are down, you could save thousands of dollars. If, besides this, you shorten the repayment time by at least five years, you could save tens of thousands of dollars in interest. This results in more money going toward the principal each month.

A fixed rate mortgage would give you stable payments. You always know what they will be, and you can always confidently plan around it. You do not have to worry about what the economy is doing. Even better, though, is that a larger portion of your monthly payment goes toward your equity than most other types of mortgages. By getting a fixed rate mortgage, and reducing your time to pay off the mortgage, you can build up your equity even faster.

Since you are considering refinancing, you may also want to tap into some of that equity – perhaps for home renovations. Some renovations, such as siding, remodeling a kitchen or bathroom, or adding a room onto the house, can also put a lot more value into your home – as soon as the project is finished. Obviously, this would also quickly raise the amount of equity you have, too. Be sure, though, that you check with your local Realtors or contractors in your area to find out which renovations actually add the most value – some renovations do not change the value much.

Be sure to shop around some for the best deal. Lenders vary quite a bit in their prices and fees, as well as in their interest rates. Building your equity fast means not letting too much of your hard-earned cash go unnecessarily into the lenders pockets. When you refinance, stay away from mortgages that have penalties for paying off your mortgage early.