REFINANCE- ALL THAT YOU WANT TO KNOW
Are you in urgent need of some extra cash to meet your requirements, do you want to save money and do you want to pay off your high cost debts and reduce the interest liability? Do you wish to rethink your existing mortgage with a new mortgage having much better terms and conditions for you? If you have any of these needs then refinance is the strategy for you to adopt. Refinance gives you an opportunity to pay back the existing high cost home loans from the money obtained by way of a new loan meeting your requirements in a much better way and against the same property as the collateral.

Well it seems a bit complicated and not leading us anywhere. Let us take an example. Suppose Mr. A and Mr. B both took a mortgage loan amounting to $200,000. After 5 years, both of them have paid off $100,000. Mr. A then takes a fresh loan worth $100,000 so as to be able to repay the existing balance on the loan, which may be a high cost loan because of the higher mortgage rates. On the other hand, Mr. Y opts for a second home loan worth $200,000 to meet his twin objectives. First he wants to repay the unpaid loan balance which is $100,000. Then he wants to use the balance amount to fulfill his other financial requirements.

In the first case, the financial arrangement is known as the mortgage refinancing and the second where the new loan amount arranged is higher than the balance of the current loan, the financial arrangement is known as a cash-out refinancing.

Refinancing can be a prudent financial jugglery for many a borrower especially who is servicing a high cost loan and is in need to arrange for more finances to meet requirements and obligations.

How Refinance will help you?
• Refinance will allow you to save more and reduce your monthly payments by obtaining a much favorable mortgage rate or a longer loan term. In case of longer tenure of loan, your installments being paid monthly will be smaller but you will end up paying larger amount of interest during the loan tenure.
• You can also reduce the tenure of your mortgage by negotiating reduction in the period of repayment. In this case your monthly outgo will increase no but you will be able to save more in interest payment. It will also allow you to get ownership of home much earlier.
• You require more money for meeting obligations and new purchases such as buying a new car or making improvements in your home and so on. With refinance, you can arrange for that extra cash for all your needs.
• You have to fulfill multiple debt obligations. You want to lower your tax payments. Mortgage interest is tax deductible unlike other interest payment like credit card revolving amount or personal loan. It is wise to repay your high cost loans with refinance and avail of great benefits in terms of lower tax liability and reduction in interest outgo.
• You can also use refinance your second high cost mortgage convert your two mortgages into a single loan. This will reduce your overall cost.
• You can also use refinance to convert your existing adjustable mortgage rate into fixed rates

HOME EQUITY LOANS
Home Equity loans are preferred by buyers as a low cost and efficient means of raising finance for buying a home. With home equity loans, home buyers obtain financing by pledging the property which acts as collateral towards the finance raised. These loans are also attractive to prospective purchasers seeking to borrow a relatively large sum of money. With home equity loans, the interests of lenders are also safeguarded to a great extent as assets are created with proceeds of these loans, which always have a tangible values. Secondly as homes are used as collateral, buyers would not be willing to default resulting in forfeiture of their homes.

There are several advantages of home equity loans which make them attractive option for home buyers and needing finances. Home equity loans are convenient and relatively cheaper compared to other forms of credit. They also enjoy a number of fiscal incentives such as tax deduction etc., which make them more attractive. Even with poor credit report, people can qualify for home equity loans. Home equity loans attract lower interest rates and allow one to spread over their repayments over a longer period of time. This makes them affordable as the monthly repayments are quite smaller. Further with a large number of mortgage finance and home loan lenders, all vying to have a pie in the cake, the going was never so good for borrowers.

However there are certain disadvantages of home equity loans also. Borrowers who default on their loan payments risk forfeiture of their home, which makes it doubly stressful especially in case of financial crises.

For obtaining a home equity loan, you may get in touch with mortgage lenders and mortgage brokers who will be more than eager to help you out in the process. You can also get free credit report beforehand as a good credit report will help you negotiate the terms and conditions and interest rates more to your favor. It is easy to obtain such a credit report and most of the financial websites will offer you instant and free credit report based on certain financial parameters disclosed by you and your past financial and repayment history. As a thumb rule, you should always get in touch with more than one mortgage lender and brokers. This will help you in comparing the relative cost of finance and other terms. Always remember that you are committing yourself for a long term mortgage and a little bit of homework always helps.

Before going for home equity loans, it is a good idea to have an assessment of your financial needs and your ability to meet the repayment schedules. It is advisable to limit your borrowings to a maximum of 80% of the value of your home. This will help you avoid getting overstretched and you can also repay the entire amount over a period of time based on easy monthly repayments.

Home loan equity is a great finance alternative for those who are in need of money for financing purchase of their dream homes. As the interest paid on these loans is tax deductible, it is considered as one of the lowest cost finance and mortgage schemes