Tag Archives: refinance

Interest Only Refinance and What It Means

January 24, 2020   Loan Tips

The various reasons homeowners prefer refinancing include taking advantage of lower interest rates, low monthly payments, getting different types of advances and to building equity. In this type of refinancing, the first 7 to 10 years of any 30 year loan only has payments required on the interest. There is no requirement of paying of the principal amount until you reach the point where it is mandatory to pay it. A good credit history will help you lower your rates of interest.

Interest only refinance loans were introduced in early 1900s, but the concept suffered a set back when the American stock market crashed in 1929. They have returned and appeal to investors, entrepreneurs and self-employed people who are short of credit. They have become very popular in the public and the private sector due to their feature of only paying the interest amount. Many people who want to increase the value of their house have opted for these loans. This type of loan, even if it does not offer very low interest rates, provides reduced monthly payments for the first 5, 7 or 10 years.

Deciding on Interest Only Refinance

Customers who do not intend to stay in a house for long, who have elastic incomes and those who invest in real estate are suited to this kind of loan. People earning from bonuses and incentives, businessmen and self employment who need payments for lean months benefit from these kinds of loans. Benefits of Interest Only Refinance

This type of loan is useful when you need to lower your payments for a specific time period. The following are the advantages of interest only refinance:

* Tax Benefits – the principal remains fixed which allows you to have a greater amount of tax deductible interest.

* Gives you Ability to Invest – returns a better interest rate than the one on simple advance.

* You have Various Choices – a simple loan cannot provide you the option of paying the principal amount when your business is earning profits, but with interest only refinance you can benefit by paying only the interest when business is slow and paying the principal when income is high.

* Paying Debt – You can save thousands of dollars by utilizing the extra cash every month, which can be used for investing in fruitful purposes.

* Future Expectations – If you think of using interest only refinance for 10 years, it will be highly beneficial as you can avoid payment of principal amount.

Disadvantage of Interest Only Refinance

The only disadvantage is that once the principal payment period starts, the payments may pile up causing difficulties in repayment. You need to carefully evaluate as to whether you will be able to handle the ballooning payments of 7 to 10 years. You might require help of a mortgage professional who will advise you how to make moves with interest only refinance.

Read More

How to Get Your Home Equity Refinance Appraised

January 16, 2020   Loan Tips

Equity is the value of a property that is above the amount owed on it. Refinancing means taking out a new loan against your property to pay off your old bills and debts. The terms combined mean that you use the equity you have built up in your home for making payments or other reasons. By using equity that is stored in your home you can get new loan or mortgage. The new loan is of a greater amount than the primary mortgage. Approval for a home equity loan is assured on the basis of value of your house.

How to Get Your Home Equity Refinance Appraised

Equity is the value of a property that is above the amount owed on it. Refinancing means taking out a new loan against your property to pay off your old bills and debts. The terms combined mean that you use the equity you have built up in your home for making payments or other reasons. By using equity that is stored in your home you can get new loan or mortgage. The new loan is of a greater amount than the primary mortgage. Approval for a home equity loan is assured on the basis of value of your house.

LendingTree Loan Type:

Type of Home:

Credit Rating:

Property State:

Reasons for Home Equity Refinancing

Different individuals have different needs so there is no specific purpose for which people refinance their home equity. However, some common reasons are:

* Debt Consolidation – If you have a number of debts to repay, you might find it hard to make the payments. Here you can refinance your home equity for consolidating the various debts. It reduces your monthly payments to great extent.

* Desire for a Larger Home – Those who wish to have a larger house opt for home equity refinance. They do not purchase a new house, as the interest rates on home mortgages are increasing day by day. Most people prefer getting their houses remodeled or renovated. Using home equity refinance, you can redo your house and fulfill your dreams of a better home.

* Change the Loan Program – Many people get their houses refinanced as their loan programs are not satisfying. If they wish to get the duration of loan increased, refinancing can be a good option.

* Refinance Cash Out – A good number of people have equity accumulated in their homes so they get it refinanced to get obtain the cash at lower rates of interest.

* Obtaining Lower Rates of Interest – Homeowners take advantage by applying a refinance loan to their existing rate of interest and save a lot of money.

Getting Appraised

An appraiser can evaluate the equity in your home on the basis of comparable sales in the area. The appraisal results are stored and can be done once or twice a year. You can get your home equity evaluated by appraisal inspectors and give the information to the company through which you will be refinanced. Moreover, various software has been developed by companies which appraise your home equity and provide information to the loan providers and banks to check the equity that is actually stored in your home. These kinds of software are used to remove the worry about your home equity being incorrectly appraised.

Read More
« Older posts
Newer posts »