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San Diego real estate library
Contemplating Re-Financing?
Homeowners who are thinking about re-financing their home may
have a wealth of choices open to them. However, these same
homeowners may find themselves feeling overwhelmed by this
wealth of options. This process doesn’t have to be so
frustrating though. Homeowners can greatly aid themselves in the
process by taking a few basic steps. First the homeowner should
decide on his refinancing goals. Next the homeowner should
confer with with a re-financing expert and finally the homeowner
should understand that re-financing is not always the best
resolution.
Decide On Your Goals for Re-Financing
The first step in any re-financing process should be for the
homeowner to establish his goals and also decide why he is
thinking about re-financing. There are many different answers to
this question and none of them are positively right or wrong.
The most vital thing is that the homeowner is making a choice
that will drive them towards their financial goals. While there
are no right or wrong answers as to why re-financing is the
right choice there are, however, a few reasons for re-financing
which are very common. These reasons include:
* Lessening monthly mortgage payments
* Consolidating current debts
* Reducing the amount of interest paid over the course of the
loan
* Paying off the loan quicker
* Building equity quicker
You may find their mortgage re-financing plan fits into one of
the above goals or there may be a totally different reason for
wanting to re-finance. The reason for wanting to re-finance is
not as critical as determining this reason. This is because a
homeowner, or even a financial advisor, will have a difficult
time determining the best re-financing option for a homeowner if
the goals of the homeowner are not known.
Speak with a Re-Financing Expert
Once a homeowner has figured out why they want to re-finance,
the homeowner should think about meeting with a re-financing
expert to determine the best refinancing plan. This will likely
be a plan which is financially sound but is also still geared to
meeting the needs of the homeowner.
Homeowners who feel as though they are especially well versed in
the field of re-financing might consider neglecting the option
of consulting with a re-financing expert. However, this is not
recommended because even the most educated homeowner may not be
aware of the newest re-financing options being offered by
lenders.
While not understanding all the options may not seem too bad, it
can have a large impact. Homeowners may not even be aware of
mistakes they are making until they hear of friends who
re-financed under similar conditions and received more promising
terms. Hearing these scenarios can be quite disheartening for
some homeowners particularly if they could have saved
considerably more while re-financing.
Consider Not Re-Financing as a Viable Option
Homeowners who are considering re-financing may realize the
significance of evaluating numerous different re-financing
options to determine which option is best but these same
homeowners may not realize they should also thoroughly consider
not re-financing as an option. This is often thought of as the
“do nothing” option because it refers to the conditions which
will exist if the homeowner does not make a change in their
mortgage situation.
For every re-financing option considered, the homeowner should
figure out the estimated monthly payment, amount of interest
paid during the course of the loan, when exactly the loan will
be fully repaid, and the amount of time the homeowner will have
to remain in the home to recover closing costs associated with
re-financing. Homeowners should also determine these values for
their current mortgage as it can be very helpful for comparison
purposes. Homeowners can compare these results and often the
best decision is quite clear from these numeric calculations.
However, if the analysis does not yield an obvious answer, the
homeowner may have to assess secondary factors to make the best
possible decision.
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