Mortgage Refinancing – Four Reasons Why You Shouldn’t

consider getting a refinance on your current mortgage, but if you don’t know what category you fit into, you might find yourself making a very costly mistake.

If you can relate to any of these four real life situations, then you need to take the time to rethink mortgage refinancing for your situation. Read more

Avoid Mortgage Refinancing…

If the equity in your home has dropped.

If your home value drops, you will find that your overall equity that your home holds has dropped, as well. In this case, you shouldn’t consider mortgage refinancing, because you may find that you cannot get refinanced for the amount you currently owe on your home. If you can refinance up to 75% of your home’s new value, then you need to ensure that you currently owe less than that, or you might wind up paying more overall than you would if you kept your existing mortgage loan.

If your current home mortgage is almost paid off.

Consider this: you have been paying on your existing loan for 20 years. Good for you, you’re almost done. Now, consider that you are hitting some tough times, and it might be nice to reduce the number of your monthly mortgage payments. Consider that if you chose to refinance your existing mortgage at what you owe, you would be potentially tapping into your home’s valuable equity, and you could risk subjecting yourself to another 30 years of interest payments again. Instead, you should tough it out with your current payments for the next ten years because your home mortgage will be paid off before you know it. Click here to read more info about home mortgage.

Man Hand writing Refinance Your Mortgage with black marker on visual screen.Business, technology, internet concept.

Man Hand writing Refinance Your Mortgage with black marker on visual screen.Business, technology, internet concept.

If your home equity has been tapped, you should avoid mortgage refinancing.

Often, many people choose to refinance their homes so they can get much-needed cash out of their home equity, but if you do this every few years, you are only managing to rip yourself off in the long run. Instead, you need to make sure that you take the time to work seriously on repaying your home loan. Don’t keep refinancing your mortgage only to find that you don’t have enough equity this time. You may need the cash, but you will likely find that if you get a second job and work through your current dilemma, you’ll be glad that you chose to work on paying your mortgage instead of refinancing it.

If you are considering refinancing your home mortgage to get cash.

Often, when you decide to refinance your existing home mortgage, it might be to tap into the equity in your home so that you have more cash for anything you might need. This can be a dangerous and risky venture that you need to reconsider if you’re thinking of getting a home mortgage refinance. When you tap into your equity, you are paying interest and extending the life on your loan that you wouldn’t be paying otherwise. If this sounds like you, maybe you should consider other ways that you can make some extra money and keep your existing mortgage the way it is for now.

The bottom line is that in many cases, a mortgage refinance might be your best option, but sometimes, a refinance isn’t your best option. If you can relate to any of the above scenarios, then you should think long and hard about how long you want to be paying on your mortgage before you consider a mortgage refinance that can cost you many years and thousands of dollars in interest payments.

Mortgage Calculations

The modern economic climate is a volatile and uncertain one and has made many mortgage providers think more carefully about who they will and will not lend to. This is not just to protect themselves, but also to prevent anyone finding themselves with a mortgage they cannot afford.

There are some important deciding factors that a mortgage provider will take into account before making an offer to an applicant. These are designed to let the mortgage provider assess whether a borrower can afford their repayments month by month, whether a borrower is a good long-term risk and whether the property the borrower wishes to purchase or borrow money against is worth enough to cover the loan if the worst should happen and repayments fall behind. Before making mortgage application, it is well worth someone considering taking out a mortgage looking into these factors and ensuring all the information the mortgage provider might need is readily available.

To some extent the mortgage provider’s requirements will depend on the borrower`s circumstances. Someone who has a large deposit against the total price of a property may not need to have the same criteria as, for example, a first time buyer with a minimal deposit. The first thing that most providers will be interested in is the total income of the applicants and evidence of that income in the form of payslips, annual accounts, P60s and so on. Read more

Mortgage Calculations

All mortgage providers have a set amount they will allow someone to borrow based on their income. These limits are known as income multiples and will differ depending on what the annual income is (some multiples will be higher for higher owners, up to as much as four times the annual income), whether it is a single or joint income and whether the applicant`s credit rating is scored as low, medium or high. As ever, it is worth checking with credit reference agency records that there are no anomalies or inaccuracies before making any credit application.

Even the highest earners may be living beyond their means, and so mortgage providers will expect to have a record of day to day living expenses, usually for a monthly period. This will then be looked at in conjunction with the applicant`s income to see how much money is available on a monthly basis to make a mortgage repayment. It is vital that the applicant is honest with themselves at this stage to prevent future problems. If the mortgage company sees that the loan is either barely or totally unaffordable, the loan will never be approved. Click here to read more info about mortgage.

The other main factor for a mortgage company to consider is a loan to property value. These loan to value comparisons are important and mortgage companies will expect to see a proper property valuation. Simply put, the mortgage company will compare the loan, or amount you wish to borrow in total, against the valuation of the property. They will be looking for a certain ration, which can differ, to give some comfort in the form of security. Some mortgage providers will not lend more than 85% of the property’s value while some may go as high as 95% in certain circumstances.

There are many available mortgage cost calculator tools that can be used to help someone assess whether their application is likely to be successful and to give an insight into what products might be available to them.

Is Your Credit Score Affecting Your Mortgage Refinance?

When you have a bad credit score, you might find that home mortgage refinancing is a bit of a challenge, but that doesn’t mean it’s not the right option for you.Sometimes, people get into situations where they just fall behind on their financial obligations. Whether it’s due to job loss, cutbacks or reduced salaries, it can be difficult to stay on top of your loans. Read more

Even when you do manage to get out of the debt you were in, you will likely find that it’s difficult to get any loan, including a mortgage, refinance. You should know, however, that you might be the perfect candidate for a refinance on your home loan, however, so there are some things to consider about taking this step.

You should consider home mortgage refinancing if you have bad credit because it could help you to get a much lower interest rate and reduce your monthly payments.

This could help you to keep more of your income and put it to use in other areas where you might have been struggling before. You might also find that you can get a shorter home loan, which means that you pay off your mortgage in a shorter amount of time, and that is the ultimate “cash in your pocket” boost. Click here to read more info about mortgage refinancing.

Is Your Credit Score Affecting Your Mortgage Refinance

You might also find that you can increase the amount of equity you have in your home by considering a home mortgage refinance, because when your home is reappraised, and you finance only for what you owe on your home, you could likely find that you are living in a gold mine.

Bad Credit Mortgage Refinance

This might sound great, but if you are walking around with bad credit, you likely think that there is no way you could get a home mortgage refinance at this time, so you might as well deal with what you have. You should know that even if your credit isn’t perfect, and you will have to look harder, you can probably get a bad credit refinance your home mortgage that will suit your needs.

For instance, if you had an adjustable rate mortgage that recently adjusted, you might find that you are struggling with your monthly payment because your rates are just too high. Even if you chose to go with home mortgage refinancing with your bad credit and settled with a higher interest rate, you could likely save hundreds of dollars each month because your fixed rate will be lower than your recently adjusted rate.