Stabler
Mortgage Payments -
This seems to be an increasingly popular reason for refinancing,
especially with everything that has been occurring recently in
the mortgage market. Borrowers who once bought their home assuming
they would move within a few years or assuming their properties
would appreciate tremendously in the next couple years, have
recently found themselves in a bit of a rut. With properties
staying on
the market longer, having more difficulty selling, and mortgage
terms starting to adjust, borrowers are seeing the dark side
of the process.
Lower
Interest Rates & Mortgage Payments -
This was more popular when interest rates were on a downward
trend, but even today finding a lower interest rate or mortgage
payment is possible. For example, a borrower may still be able
to find better interest
rates
if his or her
credit
is better
than before or if the loan-to-value ratio (loan amount divided
by
property
value) is lower (80% or less) than when he or she first bought
the property.
Build
equity faster. When
homeowners first buy their home, oftentimes their main concern
is to keep their monthly mortgage payments low. To do this
the homeowner usually chooses an interest only mortgage or an
adjustable
rate
mortgage to minimize payments. If you would like to learn more
about mortgage program types, read our article: "All Types of
Loan Programs." But interest only mortgages and ARMs minimize
the ability to build equity in the mean time. So by refinancing,
homeowners can switch their loan programs from interest only
and ARMs into long-term fixed rates paying
principal and interest. This type of program builds equity
faster in the property.
Cash
out. Your
property usually holds equity in it and you may want to cash
some of that equity out for your use. Every borrower has a different
situation, so reasons to take cash out of the property can include
everything from remodeling the home and upgrading the deck to
paying for college tuition or medical emergencies.
Finding
a more suitable loan. Life
situations change and so does every borrower's financial situation.
The borrower's financial circumstances may
change enough that he or she needs a new, more suitable
mortgage program for his or her unique needs and financial goals.
Avoid
foreclosure. In
some cases, borrowers are able to refinance their way out of
foreclosure. There may be enough equity in the home to take care
of the overdue payments, perhaps even enough to ensure the borrower
makes timely payments for the next couple years. Visit our "Avoid
Foreclosure" section to learn more about the options we offer
to help clients get out of the current situation.
Divorce. Unbeknownst
to many, divorce is actually the leading reason why properties
go into foreclosure. When couples get divorced, only one borrower
is left to pay the mortgage and oftentimes a one-income borrower
cannot afford to keep the property. In other cases, when couples
get divorced there are disagreements as to who gets to keep what
and property tends to be the most valuable asset. If it is decided
that the property will stay with one borrower he or she will refinance
the property to buy out the other borrower.
