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  • Will You Add? - Mortgage Refinance-Don't Get Caught in the Squeeze

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    if your financial condition has changed enough to get you a better credit score then you may benefit for a refinance at a lower rate. Just making the change to a fixed rate loan will usually be cheaper than an ARM.
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    One of the main reasons why foreclosures have skyrocketed in the last several months is the number of borrowers who got caught up in the frenzy of borrowing more than they could afford when the "cows came home." Now they cannot afford the higher payments

    As more and more ARM's, cash outs, interest only, etc loans come near the transition point borrowers are giving serious consideration to the alternatives to paying higher monthly payments from higher rates.

    The main reasons borrowers refinance are:

    1. Debt Consolidation. Maybe the most common because it makes the most sense. Again you are using the cheapest money (a first mortgage rate) to pay off the most expensive (credit cards) and other debts. There is no cheaper lending rate than a first mortgage rate.

    2. Save Money. If the market rates are lower now than when you took out the loan or if your financial condition has changed enough to get you a better credit score then you may benefit for a refinance at a lower rate. Just making the change to a fixed rate loan will usually be cheaper than an ARM.<

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    cannot afford the higher payments

    As more and more ARM's, cash outs, interest only, etc loans come near the transition point borrowers are giving serious consideration to the alternatives to paying higher monthly payments from higher rates.

    The main reasons borrowers refinance are:

    1. Debt Consolidation. Maybe the most common because it makes the most sense. Again you are using the cheapest money (a first mortgage rate) to pay off the most expensive (credit cards) and other debts. There is no cheaper lending rate than a first mortgage rate.

    2. Save Money. If the market rates are lower now than when you took out the loan or if your financial condition has changed enough to get you a better credit score then you may benefit for a refinance at a lower rate. Just making the change to a fixed rate loan will usually be cheaper than an ARM.

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    payments from higher rates.

    The main reasons borrowers refinance are:

    1. Debt Consolidation. Maybe the most common because it makes the most sense. Again you are using the cheapest money (a first mortgage rate) to pay off the most expensive (credit cards) and other debts. There is no cheaper lending rate than a first mortgage rate.

    2. Save Money. If the market rates are lower now than when you took out the loan or if your financial condition has changed enough to get you a better credit score then you may benefit for a refinance at a lower rate. Just making the change to a fixed rate loan will usually be cheaper than an ARM.

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    ) to pay off the most expensive (credit cards) and other debts. There is no cheaper lending rate than a first mortgage rate.

    2. Save Money. If the market rates are lower now than when you took out the loan or if your financial condition has changed enough to get you a better credit score then you may benefit for a refinance at a lower rate. Just making the change to a fixed rate loan will usually be cheaper than an ARM.

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    if your financial condition has changed enough to get you a better credit score then you may benefit for a refinance at a lower rate. Just making the change to a fixed rate loan will usually be cheaper than an ARM.

    3. Get Cash Back. If the value of the home has risen enough this represents the cheapest money there is and can give you money to make home improvements, travel, etc. When applying simply request more than the existing loan and keep the difference.

    But now there is a new rub-plunging home values-nearly 10% in one month. Borrowers need to be careful when considering a refinance because of this twist. The reason they need to exercise caution is they could potentially get "upside down"-owe more than the home is worth-not a pretty picture!

    So when considering a refinance on your home for any number of good reasons listed above and elsewhere be extra careful of the fickle real estate market.

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