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Mary~ Thank you so much for helping me start a doable financial plan. I felt a weight lifted after our meeting. But more importantly thank you for inviting me to the meeting last night. It was just what the doctor ordered. I was feeling a lot like Catherine Ponder in her introduction (even though my situation is not nearly as dire) yesterday. But being in the presence of so many posotive women, my mental chatter has cleared significantly and I'm back to focusing on what I want. Plus, of course I have to say a special thank you to incorporating PPL into the meeting. Four ladies asked me to set appointments with them to sign them up! That's an extra $800 in my pocket thanks to you! |
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—Dia Lautenschlager.
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There are five major reasons to consider refinancing an existing mortgage:
- Decrease monthly payments from a higher fixed rate to a lower fixed rate.
Example: If the rate is 7.5% now and a homeowner switches to a 6.5% rate, he or she will save 1% on the mortgage less the costs of refinancing. On a $200,000 mortgage, for example, the savings will be over $50,000 over 30 years by reducing the interest rate by just that one percentage point.
- Improve monthly cash flow with lower payments.
Cash flow may be tight after moving into a new home. Switching to an adjustable rate program where the rate is fixed for the next three to ten years could provide breathing room needed. Similarly, for those who are in a 15 or 20 year term loan, switching to a 30 year term can also increase monthly cash flow.
- Switch to a fixed rate program to eliminate payment changes of adjustable rate mortgages (ARMs).
Homeowners with one year ARMs will see their rates rise as rates move up. Using programs that hold rates steady for three, five or seven years, you can refinance into a low fixed rate.
- Withdraw funds from the equity in a home.
If cash is needed for home improvements, college education or to consolidate debts, the borrower may be able to refinance 75% to 80% of the current value of the home if it has been owned for one year or more.
- Shorter loan terms
Probably the best incentive to refinance is found by refinancing into a shorter term loan while keeping the loan payment stable. A borrower can save tens of thousands in interest by reducing the term of the loan.
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