In tough economic times, one of the first things that most people are concerned with is protecting their home. Owning a home is an American dream and in most cases is makes up the bulk of a person’s net worth and wealth. Unfortunately, owning a home can be very expensive and when you have large mortgage payments due, it can become difficult if you lose your job or suffer from other economic uncertainty.
Fortunately, for those who are struggling to pay their mortgages, or for those who just want a lower rate in order to save money and relieve pressure associated with monthly bills, there are options available. In 2008 and 2009, interest rates are at record lows. These low rates are designed to encourage home buying and to stimulate the economy in the troubled economic climate. Buyers who have a home loan or home mortgage may be able to take advantage of these record loan interests rates by refinancing their existing mortgage.
Refinancing your mortgage is a simple process in which you apply for a new loan from a lender. The new loan is used to repay your old mortgage loan, which was usually at a higher interest rate, and you now will have the balance only on the new loan instead. It is possible to refinance your mortgage at a lower rate with your existing lender, and it is also possible to shop around for a new lender who may be willing to refinance your loan. Be aware, though, that if you go to a new lender, you may have to get your home appraised again to determine the current value (although you may also have to do this with your existing lender if there is reason to suspect the home value has changed since you took your original loan).
If you really want to save money by refinancing your mortgage, it is advisable to shop around for lenders and look at the different options available to you. FHA refinancing, or refinancing offered through the Federal Housing Administration, may provide many benefits that other lenders don’t. FHA loans may have a lower interest rate or offer other incentives.
FHA loans can also be used for new home builds, in addition to FHA refinancing loans. Both of these options can be attractive to buyers, or to people who already own their homes, as methods to save money on a home mortgage.
To calculate whether refinancing is worth it, determine how much you are currently paying in interest and then determine how much you will pay under the new loan. Subtract closing costs and figure out whether you plan to stay in the home long enough to make the interesting savings worth the closing costs you are going to pay. If so, home refinancing may be a great way for you to save money on your mortgage.
