Monday, June 13, 2011

Refinancing, Debt Consolidation

People refinance thier homes for many reasons; starting a new business, clearing out credit card debt, renovating or property improvement, putting a child through school or just to take advantage of low interest rates. Sometimes refinancing makes sense for people retiring, they may not have the home paid off for whatever reason and at retirement they take a big hit on income. So why not stretch the amortization to the max and enjoy the golden years without feeling a financial pinch.

Refinancing is actually pretty simple, you just break one mortgage and get another one. In order to find out if it is best for you, it is a good idea to speak with someone who will explain all the pros and cons. We have all seen those flyers in our mailboxes that explain the savings when you consolodate and for the most part they are true, but rarely will they tell you the costs associated with it.

Refinancing Fees

There will be legal fees, usually about $1,000 and a penalty. The penalty can be just three months interest or interest rate differential. If your rate is higher than your currents lenders discount rate then they will penalize you the differnce in money they lose when you break your mortgage. If you are on good standing with your lender they may waive this penalty for you. If they don't why keep giving them your business?

Another thing, in most cases there should not be a broker fee. Occasionally there will be depending on your credit, income and equity in the home. Generally if the deal is going to a "B" lender you can expect some sort of fee. Make sure you know what it is when you get the approval, do not find out a rediculous broker fee is being charged when you are signing the papers. A mortgage insurance premium may also apply if you are refinancing over 80% of your homes value.

It is a good idea to sit down with a mortgage broker or call one to see if the costs make sense to you. If you are saving money or if it is going to cost you money. It could be the piece of mind you recieve is worth the extra costs. With interest rates as low as they are you can save a lot of cash over a five year term, and easily justify the costs, especially if you have high credit card debt.

We can finance up to 85% or your homes value, feel free to call me if you want a quick estimate on your home to see what is possible.

I hope this helps, feel free to ask questions or comment. Email or call for privacy.

Ron Miller

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