Why Should I Refinance?

The overall goal of refinancing is to save money, it is that simple. When you refinance your mortgage, you pay off your old loan with a new one, it is like upgrading your computer for a faster, more efficient model. People may refinance for many different reasons some of the most common are:


To Refinance for a Lower Interest Rate
Lets say when you initially bought your home, the best rate that could be offered at that time was 9.5%, you have since been watching the interest rates steadily fall from 9.5% to right around 7.5%. Well, now is the time to act! A slight drop in interest can equal substantial savings over the life of the loan. Your monthly payments will lower with less money going to interest and more going to the principal balance on the loan.


To Change from an Adjustable Rate Mortgage to a Fixed Rate Mortgage
An adjustable rate mortgage can be great, in the beginning, but when rates go up, your payments will increase along with your interest rate. Lets say when you initially bought your home, you were offered the adjustable rate of 7% or even lower, that sounds great, but remember if interest rates ever go up, which they will, you will also watch your payments steadily rise. Adjustable interest rates are great for short term savings but for homeowners planning to keep their mortgage for a long time, fixed rates offer better money management. With a fixed interest rate, you can better manage your monthly expense for your mortgage without wondering if the payment will increase soon.


To Lower Monthly Payments
When you have either a high fixed rate or an adjustable rate mortgage, refinancing can substantially lower your monthly payments. Remember, even a slight interest rate cut, can yield high savings.


To Pay Off High Interest Rate Credit Card Debt
Almost everyone has credit card debt, some more than others. Why not use the equity in your home to pay off those high interest rate credit cards? It just does not make any sense to pay a credit card company 21% when you can pay off the debt using your home equity at a much lower rate, the savings are substantial! Remember, the interest you pay on your mortgage is tax deductible, interest accumulated in credit card debt is not!


To Get Cash-Out
Let's say your child is college bound and you are looking for a way to finance his or her education, or your home is in need of a new roof, or you are looking to take your spouse on a second honeymoon--why not use the equity in your home to fund those expenses! Every time you make a mortgage payment, some goes towards interest and other fees and the rest goes towards the principal balance of the mortgage, the more payments you have made the more equity you have! If you use your home equity to finance those necessary life expenses you will also have an additional tax deduction, something your local bank cannot provide.


To Shorten the Term of the Mortgage
When you refinance to a shorter term, you are lowering the amount of interest you pay over the life of the loan. Your monthly payments will more than likely increase, but your overall savings will be substantial! You will build equity in your home much sooner with a shorter term and will drastically reduce the amount of interest you have paid by the time you own your home free and clear.


To Stop Paying Mortgage Insurance
If you put less than 20% down when you purchased your home than you are probably still paying mortgage insurance. Your mortgage insurance is more than likely included in your monthly payment with your principal and interest. If you are still paying mortgage insurance and have more than 20% equity than you have a great reason to refinance! Refinancing without the insurance payment is yet another way to lower your monthly payment!


When it comes to refinancing with Millenium Mortgage, your options are endless!. Whether you are refinancing for the first time or have been through this process before Millenium Mortgage has the right program for you. Since we have so many loan programs available, we are able to offer you the best possible program for your situation, our expert sales staff will guide you through your decision making process!



The Do's and Dont's of Refinancing

For some people, refinancing can be an intimidating process. Millenium Mortgage would like you to avoid making some common mistakes, so your refinancing experience is quick and efficient!


Do the math, don't assume the savings, make sure you know your numbers!

When it comes to refinancing with Millenium Mortgage, the programs are to numerous to list. It is important for you to know what you are interested in and have your Millenium Mortgage representative help you compare the costs of each different option.

Do account for closing costs and points, don't assume there will be no out of pocket expenses!

If you are planning on staying in your home for a long time, paying points might help you get an even lower interest rate, the up front out of pocket expense will save you money in the long run by lowering the total amount of interest you will pay over the life of the loan. Closing cost fees will vary depending on your loan program and the amount financed, your Millenium Mortgage representative should inform you of the fees you will need to pay at closing.

Do make sure you have equity, don't assume you can refinance without any!

Having equity in your home is very important when it comes to refinancing, especially when you are looking for cash-out or debt consolidation. If you have a question concerning the equity in your home contact Millenium Mortgage now, we will have the answer!

Do make sure you pay your mortgage payments on time, don't assume you will qualify for a loan with a late payment history on your mortgage!

In addition to the rest of your credit history, your mortgage payment history is very important especially if you are interested in refinancing, make sure your payments are paid by the due date each month. Your credit rating plays a key role when determining what programs you will qualify for. Being late on your payments for your mortgage and other debts will only hurt you in the future.

Do make sure your credit report is correct, don't get turned down because of an inaccurate credit report!

A mistake on your credit will limit the programs that you will qualify for, before refinancing have a Millenium Mortgage representative review your credit standing to inform you of any potential problems. When reviewing your credit make sure you ask the following questions: are all accounts listed mine, are all outstanding balances correct, are all past due amounts correct, are all status dates correct, are there any duplicate submissions, and are all court or public records correct? You may also contact the credit bureaus by writing the addresses listed below, make sure you keep all documentation!

TRW Credit Data
505 City Parkway West, Suite 110
Orange, CA 92613-5450
714.991.6000

CBI/Equifax
5501 Peachtree Dunwoody Road, Suite 600
Atlanta, GA 30356
404.250.4000

Trans Union Credit Information Company
444 North Michigan Avenue
Chicago, IL 60611
312.645.0012

CSC Credit Services, Inc.
652 East North Belt, Suite 133
Houston, TX 77060
713.878.4840

Do assume your monthly payments will increase with a shorter term, don't assume the savings will be instant!

Again, when you refinance for a shorter term, your payments will more than likely increase but the savings will show in the long term! Make sure you are not intimidated by your new monthly payments and aware of your overall savings.

Do consolidate your high interest rate credit card debt, don't pay off your credit cards with your home equity and charge them up again!

Paying off high interest rate credit card debt is a wise decision! Many people have made the mistake of charging up their credit cards right after paying them off and as a result increase the amount of debt they have to even more than it was before they refinanced! The best advice for those who have paid off credit card debt with their home equity is to keep credit card expenses to a minimum if any!

 

Do know how much you can afford, don't become "house-poor" by purchasing or refinancing to payments that are not within your budget!

Becoming "house-poor" is one of the worst things you can do, make sure you live within your budget to avoid late payments and ruining your credit!

HOME | Home Purchase | Refinance Your Mortgage | FHA Refinances | Consolidate Your Bills
Get Some Cash Out Of Your Home | Apply For A VISA Card | Apply For A MasterCard
Privacy Statement | Email Us