Getting an Interest Only Loan Refinancing
Posted by: real estate / Category: Mortgage RefinanceWhen refinancing an interest only loan the process is the same as in any other refinancing. It is simply the swapping of one loan for another. When interest rates are low it’s a very good time to refinance since you can save yourself considerable amounts of money over the life of the loan. Also, by changing your high interest loan to a lower interest loan you’ll be able to save on your monthly payments, freeing up cash for other uses in your monthly budget. You can then use this extra cash to pay other bills or even to invest in stocks and bonds or other investments. Many people have also used refinancing to get out of adjustable rate mortgages before interest rates go up and their rates adjust to higher levels. In recent years a majority of new mortgages have been refinanced loans.
When refinancing interest only loans many people do so simply to give themselves more time. They are trying to delay the repayment of the principle further and keep their low interest only payments for several more years. Just know that this will also increase your risk since the possibility exists for interest rates to go higher, for the economy to slump or for your home value to decrease. You can see two of these factors at work now in the current mortgage crisis across America.
The best candidates for interest only loans are those who expect large capital gains over the next few years and those who plan on selling the home before the interest only period of the loan has expired. As long as the economy is strong and house values are rising this can be a good strategy. It can work well for those who have an irregular income, like salesman who work on commission and also for those who expect a large increase in their income. When refinancing the interest only loan you can also use your savings to do some home improvement and increase the value of the home to build equity.
Before refinancing any loan you should ask yourself several questions such as:
?How much equity is there in the house?
?What would the closing costs be like?
?How long are you planning on staying in the house?
?Will the savings from the refinancing allow you to recover your closing costs?
?How many points (if any) will you need to pay to get the lowest rate refinancing?
You can find many good lenders that offer refinancing for interest only loans. Traditional banks and credit unions are one source of refinancing options and you’ll also find a lot of good lenders online who are willing to refinance your interest only loan at very competitive rates.
To learn more about refinancing interest only loans and tips for home equity loans please visit the author’s website.
Steven_Walters
Last 5 posts in Mortgage Refinance
- Why Consider Adjustable Rate Mortgage? - November 29th, 2008
- Refinance Rates Tumble With Falling Treasury Yields - November 29th, 2008
- Why Apply For a Government Insured Mortgage? - November 29th, 2008
- A 2nd Mortgage Loan - Potential Benefits - November 28th, 2008
- The Future For Mortgage Brokers - Part 2 - November 28th, 2008
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