Compare Mortgages

Creating and maintaining wealth is a very difficult task. Ask any millionaire!!! The delicate balance of living a dream lifestyle and holding expenses tight creates this difficulty. As a financial advisor, I have assisted people accumulate monies to live their dream life while discovering ways to reduce their necessary expenses. Everyone would agree mortgages are necessary expenses. Probably the biggest expense most of us have. Mortgages present the opportunity to secure income tax deductions while utilizing the house to live. What if you could reduce your mortgage interest rate to 3% and be required to pay interest only for 5 years? Would you refinance your current house? Purchase another? While refinancing a clients mortgage, I discovered such a mortgage. The client will save lots of money the next few years. Here is his scenario:

Client #1 500,000 Loan Amount
Current
30 Year Fixed @ 6.00%=P&I 2,997.75 month
5th year loan balance 456,989.77
Equity (assuming no appreciation) 43,010.23

Past
LIBOR ARM @ 3.00%=Interest only 1,250.00 month
Applied additional 1747.75 month to principal for 5 years
5th year loan balance 362,370.82
Equity (assuming no appreciation) 137,629.18

Creating and maintaining wealth is a very difficult task. Ask any millionaire!!! The delicate balance of living a dream lifestyle and holding expenses tight creates this difficulty. As a financial advisor, I have assisted people accumulate monies to live their dream life while discovering ways to reduce their necessary expenses. Everyone would agree mortgages are necessary expenses. Probably the biggest expense most of us have. Mortgages present the opportunity to secure income tax deductions while utilizing the house to live. What if you could reduce your mortgage interest rate to 3% and be required to pay interest only for 5 years? Would you refinance your current house? Purchase another? While refinancing a clients mortgage, I discovered such a mortgage. The client will save lots of money the next few years. Here is his scenario:

Client #1 500,000 Loan Amount
Current
30 Year Fixed @ 6.00%=P&I 2,997.75 month
5th year loan balance 456,989.77
Equity (assuming no appreciation) 43,010.23

Past
LIBOR ARM @ 3.00%=Interest only 1,250.00 month
Applied additional 1747.75 month to principal for 5 years
5th year loan balance 362,370.82
Equity (assuming no appreciation) 137,629.18

Client #21.2 Million Loan Amount
Current
525 ARM @4.25%=P&I 5,903.28 month
5th year loan balance 1,064,681.48
Equity (assuming no appreciation) 135,318.35

Proposed
LIBOR ARM @3.00%=Interest Only 3,000 month
Applied additional 2903.20 month to principal for 5 years
5th year loan balance 971,261.81
Equity (assuming no appreciation) 228,738.19

You can see from these scenarios this mortgage can be a great tool to reduce your monthly mortgage payment or to shave down the loan balance thereby increasing your equity. This mortgage interest program is termed negative amortization. Rather than paying off the interest over the time period, you are paying of a small portion of the interest but not the required amount. Interest rates can go as low as 1.25%. If you want savings refinance your mortgage.

When refinancing a mortgage loan, homeowners have several options. There are numerous reasons for refinancing an existing mortgage. The past five years have witnessed low mortgage rates. However, low rates will not remain forever.

Before interest rates begin to climb, homeowners should take advantage of their refinancing option.

Which Home Mortgage Lender to Choose?

Many financial lending institutions offer mortgage refinancing. If hoping to secure a good refi loan, it may be practical to use a refinancing specialist. Mortgage specialists are able to address all your concerns. Moreover, they can offer expert advice on which type of mortgage refinancing to choose.

Homeowners who are satisfied with their existing mortgage lender may consider obtaining a new mortgage with the same lender. However, using the same lender is not required. In fact, even if your mortgage lenders offer a good refi loan rate, it helps to obtain additional quotes and compare the different offers.

What are Your Refi Loan Options?

When refinancing a mortgage loan, homeowners have several loan options. Usually, homeowners refinance to lock in a low fixed rate. This way, mortgage payments remain predictable. Many select adjustable rate mortgages below of their low introductory rate. If homeowners choose a mortgage loan with an adjustable rate (ARM), they should anticipate changing rates. If rates falls, ARM’s pose little threat. However, if rates increase, so does the mortgage payment.

Homeowners should also select an ideal term when refinancing a mortgage loan. For example, will they extend the loan term by refinancing for another 30 years, or choose a shorter term and refinance for 15 years.

Cash-out Refinancing Loan Options

Because the average consumer debt is approximately $8,000, excluding auto loans and student loans, many homeowners choose refinancing as a method of reducing their debts. Cash-out refinancing, which entails borrowing from your home’s equity, is perfect for consolidating debts and financing other large expenses such as home improvements.

Before applying for a refinancing, homeowners should do their research and familiarize themselves with the refi process. For example, refinancing involves paying closing fees. Thus, homeowners ought to have a cash reserve or select a mortgage loan that includes the option of wrapping the closing fees into the principle balance.

Refinancing is a smart move if you want to lower your monthly payment and overall interest bill. With refinance mortgages, you are also able to change the term of the loan to a shorter one so you can pay off the loan earlier and save more on interest.

There are actually several reasons why people want to take a refinance mortgage. This is also why refinance mortgage rate calculators are important. Refinance mortgage rate calculators help consumers determine the amount of savings they can make on their chosen loan type. Refinance mortgage rate calculators also aid you in finding out how much is your monthly payment for your refinancing loan.

The Internet refinance mortgage rate calculators show you the monthly payments you need to make for your mortgage. Aside from that, these refinance mortgage rate calculators also show you the total interest rate. If you’re more concerned on how much saving you will be able to make with a refinancing loan, refinance mortgage rate calculators will also help you on that.

The refinance mortgage rate calculator will ask you for your current loan information. For instance, on the refinance mortgage rate calculator, a field labeled Principal Balance will be provided along with the Monthly Payment and Annual Interest Rate fields. You need fill these up in order to start using the refinance mortgage rate calculator.

To complete the process, the website’s refinance mortgage rate calculator will also ask for your new loan information. Another three fields will be provided in the refinance mortgage rate calculator. The refinance mortgage rate calculator fields are: Annual Interest Rate, Term, and closing Costs. By checking on the Finance Closing Costs at the bottom part of the refinance mortgage rate calculator and then hitting the Calculate button, you can determine how many months it will take for your loan to break even on the closing costs.

For example, for the Principal Balance field on the refinance mortgage rate calculator, you put in £150,000 (Take note that the amount you place in this refinance mortgage rate calculator field represents the remaining pay-off balance). The Interest Rate of your current loan is 6% and the data you put in the refinance mortgage rate calculator Monthly Payment field is £899.30.

For the New Loan Information portion of the refinance mortgage rate calculator, you place the following data: 5% Annual Interest Rate, 30-year Term, and £0 for Closing Costs. Make sure that you check the box for Finance Closing Costs at the bottom of the refinance mortgage calculator before hitting the Calculate button.

The results of the refinance mortgage rate calculator would show you that your new monthly payment would be £805.23, £93.77 short of your current loan monthly payment.  The refinance mortgage rate calculator would also display the difference in the interest rates of both loans. With the refinance mortgage rate calculator, you will be able to find that the total interest of your current loan would be £173,757.28 while your new interest after refinancing would be £139,883.68. This allows you to save £33,873.61 on interest.