It's often wise to pay off your mortgage before starting retirement. But if you can't pay it off, here are some considerations for refinancing it.
-Two reasons to refinance are:
* to secure your ability to keep paying your mortgage and
* to save money
-Securing future payments you can pay:
Adjustable rate mortgages (ARMs) generally carry lower rates than a fixed rate mortgage, but if interest rates rise, your ARM payments will increase - perhaps too high to pay. It's best to bite the bullet and refinance to a fixed-rate mortgage. Though payments may be higher, they'll never go higher.
personal loans no credit checks, debit consolidation , get a personal loans,
-Saving money with refinancing:
You save money by refinancing to a lower interest rate mortgage. You can refinance from a fixed rate mortgage to
* a lower interest rate fixed mortgage
* a lower interest rate ARM
Even if interest rates haven't changed on your fixed rate mortgage, you'll save going to an ARM for its lower rate. But do this only if you plan to move in 3 years or so - perhaps to your retirement home.
To make refinancing worthwhile, you need to reduce from your current interest rate about 1% or more. The rate change really depends on how high your current rate is - going from 9% to 8% is a lost less of a break than going from 3% to 2% - and your closing costs.
Calculate your monthly savings by comparing your current payment with the refinanced payment. As an example, if you have a 30-year fixed rate mortgage loan for $100,000 at 6.5% interest rate (fixed), and your monthly payment is $632.07. Going to 5.5% interest (fixed), reduces your monthly payment to $567.79 - a monthly savings of $64.28, or $771.36 annually.
The cost of refinancing can be about 1.5% of your loan but it can be substantially higher - check with your lender. That's about $1,500 for your $100,000 mortgage. It'd take you 2 years for your annually savings of $771 to pay the cost of refinancing. After that, your savings start. Higher interest rate reductions can handle greater closing costs too.
-Tax breaks:
The points you pay for refinancing must be deducted over the length of you loan. But that portion of any points from a previous refinancing and not yet deducted can be deducted in full in the year of this new refinancing.
Paying both state taxes on working income and a mortgage will most likely allow you to itemize your tax deductions. This means that you can deduct the interest portion of your yearly mortgage payments. The higher your marginal tax rate, the more those deductions will save you on taxes.
Need Money? Let Me Help You
Take advantage from the innovative CreditGraph lending technology today.unsecured loans for bad credit
Up To $ 1500 Quick Loan Online. No Hassle. Fast Instant Approval. 100% Approval In 1 Hour. No Telecheck. Get Quick Loan Now!
No comments:
Post a Comment