The Only Reasons Why You Should Want To Refinance

 


Visitors: 111

Knowing why you should refinance is as important to knowing how to do it properly-here are the top 9 reasons why homeowners often request to refinance their home mortgage loan (in no particular order):

1. I want to retire my existing lien and get a new/different mortgage.

Rate and Term Refinances are often done to avoid escalating payment adjustments and/or rate volatility are common driving factors behind a homeowner's desire get out of the “mortgage roulette game" (refinance out of an adjustable rate mortgage).

2. I plan on making repairs and/or home improvements to the property.

Making home improvements is an American obsession-The annual spending for home improvement in North America exceeded 418 billion dollars in 2006.

3. I want to lower my interest rate/lower my monthly payment.

This is by far the number one reason why homeowners refinance-saving money has the same “sex appeal" to the American homeowner as does spending it.

4. I need to pay off a mortgage subject to a balloon maturity.

Having a mortgage due in full at maturity is a pretty strong motivator for those that opted to use a balloon mortgage to originally purchase/refinance their home.

5. I need to consolidate credit card debts/lower my total monthly debt burden.

The benefits for consolidating credit card debt is twofold-it allows you to transform non-deductible consumer debt into tax deductible mortgage interest & in most cases it reduces both the average cost of borrowing (lower monthly payment) and applicable interest. Downside? You are using equity to secure what was once unsecured debt.

6. I want to obtain some money for personal reasons.

Ranging from funding junior's college ed to using equity to purchase a 2nd/vacation or investment property are reasons why people decide to separate their equity from their home.

7. I need to improve my cash flow.

For investors this means an increase in net operating income (NOI) for homeowners it means a reduction in monthly debt burden.

8. I want take advantage of some tax benefits.

Here are the two big tax reasons/benefits for refinancing:

- USE A HOME EQUITY LINE OF CREDIT (HELOC) TO CONVERT NONDEDUCTIBLE PERSONAL INTEREST INTO TAX DEDUCTIBLE INTEREST.

- REFINANCE YOUR CURRENT LOAN AND CLAIM ANY UN-DEDUCTED LOAN FEES AND INTEREST.

- MORTGAGE INTEREST PAID IS TAX DEDUCTIBLE IN THE YEAR IT'S PAID.

- PAID PREPAYMENT PENALTIES ARE TAX DEDUCTIBLE IN THE YEAR IT'S PAID.

- LATE PAYMENT FEES ARE TAX DEDUCTIBLE IN THE YEAR IT'S PAID.

- PREPAID MORTGAGE INTEREST IS TAX DEDUCTIBLE ON AN ITEMIZED BASIS.

- THE COST OF DISCOUNT POINTS ARE TAX DEDUCTIBLE ON AN ITEMIZED BASIS.

SPECIAL NOTE: Consult a qualified CPA or accountant to get information on the full tax benefits for homeownership.

9. I want to do away with PMI (private mortgage insurance) premiums.

Lenders are required to cancel PMI (upon request by you) when the loan balance is equal to 80% of the original purchase price/appraised value. If the loan balance is equal to or less then 78%, by law, PMI must be cancelled automatically.

-

H. Scott Miller is a nationwide commercial and residential investment lending professional specializing in the creation, management and growth of real estate wealth from a mortgage prospective. He is also the author of “The Not So Funny Games That Lenders Play With Your Money That Can Cost You A Fortune Every Time You Get A Mortgage" which is freely distributed at The Mortgage Inner Circle .

(624)

Article Source:


 
Rate this Article: 
 
Mortgage Refinancing: Five Good Reasons to Refinance Your Mortgage
Rated 4 / 5
based on 5 votes
ArticleSlash

Related Articles:

Reasons to Refinance Now

by: David Reinholtz (November 04, 2010) 
(Real Estate/Mortgage Refinance)

7 Reasons to Refinance Your Car

by: Patricia Martin (September 29, 2011) 
(Finance/Auto Loans)

3 Great Reasons to Refinance Your Home

by: Tony Mancini (November 06, 2008) 
(Finance/Mortgage Refinance)

Reasons to Refinance When Rates Are Moving Up

by: Chuck Aikens (November 17, 2005) 
(Finance/Mortgage Refinance)

Refinance Mortgage Rates Hover Around 5.00% - The Reasons Why

by: Anthony Russell (November 24, 2009) 
(Finance/Mortgage Refinance)

Home Mortgage - Reasons to Refinance Your House

by: Carrie Reeder (November 01, 2005) 
(Finance/Mortgage Refinance)

Bad Credit Mortgage Refinancing - 3 Reasons to Refinance for a Better Rate

by: Carrie Reeder (December 26, 2005) 
(Finance/Mortgage Refinance)

Unable to Refinance Adjustable Rate Mortgage on Rental Property - Two Common ..

by: Darin Sewell (September 17, 2008) 
(Finance/Mortgage Refinance)

Take a Quick Peak at the Common Reasons for Getting a Home Loan Loan Refinance

by: Rony Walker (December 21, 2007) 
(Finance/Loans)

Mortgage Refinancing: Five Good Reasons to Refinance Your Mortgage

by: Louie Latour (August 23, 2006) 
(Finance/Mortgage Refinance)