Refinancing Your Mortgage – Know When and When Not to Do

Refinancing your mortgage means compensating your existing loan with new one. According to MBA (Mortgage Bankers Association) refinancing is the major part of mortgage applications. There are various reasons for mortgage refinancing like low interest rate, change of adjustable-rate, fixed-rate, and more.

If you are looking for the best refinance loans in Phoenix Arizona, then you must visit Capital Fund I LLC website immediately. They provide reliable loans for real estate project at low interest rates. Also, they offer service of friendly professionals to find right loan for the investment of their clients.

The following are few things that you need to consider before applying for your mortgage refinance.

Low interest rate

The best reason for refinancing is low interest rate on current loan. Even though, refinancing is the best option to choose, but if you are able to reduce at least 2% of interest rate, then you can save more money and decrease your payment size every month.

Decreases term of loan

If interest rate decreases, you will get an opportunity to refinance your current loan with another one with small changes in your monthly payments. For instance, if you have a loan of $50,000 for 30-years fixed rate refinancing from 9-5.5 percent will reduce the term to half that is 15 years by changing your payment from $402.3 to $408.54 every month.

Converting fixed rate or adjustable rate

If your interest rate is decreasing, then converting your fixed-rate loan into ARM is a good strategy. With this, you can pay small payments every month. If interest rate is increasing it is a hasty idea.

If you want to stay in your home for only few years, then converting to ARM is a very good idea because it offers a low monthly payment compared to fixed-term. Also, there is no need for you to concern regarding higher interest rate in future.

Plus, interest rate on your mortgage helps to deduct your tax, so increasing your term period is a smart decision to save your wealth.

If you want to apply for a loan know the equity of your home, cost of refinancing, your ratio of debit to income, credit score, interest rates, term, and more. With this, you can find the best refinancing strategy.

Refinancing is an ideal move if you can reduce monthly payments, term period of loan, or you can build equity faster. Gather necessary information about refinancing, choose a reliable company and apply for your refinancing depending on your financial condition.

Post Author: Callie Josue