Tips for refinancing your mortgage
Tips for refinancing your mortgage
You can do many things with your home other than just live in it. You can use the value in your home for fiscal gain. First off, you can use the equity in your home to pay off debt at a much lower rate. For instance, say you're paying $1,500 a month on $30,000 of debt. If you have the equity, you can do a cash-out refinance and pay off the debt and your mortgage payment might only go up $300. This gives you an additional $1,200 in monthly cash flow. For this to be really effective you need to realize that you can't get into that much debt again because you might not have the equity to bail you out again. Another thing you can do is take all the equity out of your home and invest it. You may be able to make more money on the investment than you pay out in interest over the life of the new loan. It is important to know that if you choose to take cash out of your home and invest it, you should seek the advice of a certified financial planner. Not many people take advantage of this because it can be risky, but it is an option.
If you are considering refinancing, also remember that there are a variety of different mortgages. If you plan on living in your home for a long period of time, you may want to consider the traditional fixed-rate 15- or 30-year loan. Another option is to choose an adjustable rate mortgage and consider refinancing again in a few years. By refinancing, you can choose the perfect mortgage for your needs, which may have changed since you first bought your home. A mortgage broker can be a useful tool to help find the most appropriate mortgage for your refinancing.
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