Home refinance loans in New Jersey
Things change. The housing market transforms. Interest rates fall. Financial circumstances get better or worse. There are a lot of factors that can have an effect on mortgage repayments and why they might need to be adjusted. Living in a highly competitive market like New Jersey, where prices are more likely to increase, is surely one of them. When circumstances change you will have to change with them. And while it is often not the first option to consider, particularly when money is a little bit tighter than normal, replacing your mortgage is sometimes the right option. In fact, if you smart about it and have a lot of equity on your property it can be a very smart decision indeed.
What is home refinance?
The first thing you’ll need to know is what exactly we’re talking about? Refinancing your home is simply replacing your old mortgage with a new one. People do it to allow themselves some freedom to obtain a better interest rate and to make lower repayments. The first mortgage still has to be paid off though, so it is not simply a case that you swap one of the other. There is also no guarantee that you will be able to negotiate a lower interest rate. So refinancing is something that should only be carried out when all the information is available.
Should I consider it?
If you absolutely want to go down the refinancing route then there are a number of things you will have to consider. The first one is how will you repay the loan. If you’re using the equity to renovate your house, then that is essentially an investment in the property and the money made back from its eventual sale can be used to help repay the loan. However, if you have decided to use the money to pay down credit card debt, for instance, then you will have to have a concrete idea about where the cash is going to come from in future to pay back the loan. Make sure and discuss all your options with your current lender and any other experts, to find out what deals are available and if the time is right for you to refinance your property. It might be that patience is the best form of investment you can currently make.
When can I refinance?
This will come down to the individual lender but most will require that you maintain your original mortgage for at least a year before you can try and replace it. Beyond that it is usually up to the borrower. Just remember that in most cases it is best if you stay with the original lender as they tend to offer the best rates and will waive certain fees such as ones for a second property appraisal. Although, as always in these situations, it is worth shopping around a little first.
While it is often a risky business there are plenty of benefits when it comes to refinancing your home. The main one is the potential to lower your interest rate. As people age and their careers develop it is often the case that one’s credit score increases. Bill are paid on time and loans are paid off meaning that credit ratings can increase substantially. When this is the case it often makes sense to refinance your property to help negotiate a better interest rate with your lender of choice. A lower interest rate can have a huge impact on monthly and annual payments and save borrowers huge sums of money over the course of the mortgage. Another potential benefit is that people might be in healthy enough financial state to now be able to avoid paying private mortgage insurance, which is required when a mortgage is first taken out.
A slightly more complicated reason people look to refinance their property is if they are looking to make an expensive purchase. This could be buying a car or going on an expensive holiday. In this case people can attempt to take out equity on their property as a line of credit. The building is appraised and the lender decides how much of the appraised amount they are willing to lend. Then the balance owed on the original loan is subtracted. Once that money is used to pay off the original amount, the remainder is loaned to the borrower.
This form of financing is great if you’ve made substantial improvements to the property over time and significantly increased its value.
Most of the problems with refinancing your home come from the potential fees incurred. For instance, you will have to pay for an attorney to get you the best deal and handle all the admin that comes with conducting a venture such as this. There will almost certainly be bank fees involved as well. Although the worst of these can be avoided if you shop around for low fee or free refinancing.
Another issue can come with attempting to pay off your mortgage and use the equity on it as a line of credit. In some cases there will be an agreement made with the lender that the borrower will incur a fee if this happens. Occasionally, this fee can run to thousands of dollars. That doesn’t mean you should refinance though, just make sure that the cost involved doesn’t outweigh the money made in equity.
Refinancing a property can be a complicated and time-consuming business. It is also one that comes with a lot of potential risks. Of course, the rewards are also considerable as well. To successfully refinance your home you need to seek the right guidance and expert advice. This is where we come in. We’ve decades of experience helping people with home refinance and pride ourselves on our excellent customer service.
If you have any questions about refinancing your home or are simply looking for some information on whether it is right for you, please get in touch and we’ll do our very best to help.