The Facts About a Home Affordable Refinance Program

June 28, 2012 by  Filed under: Loans 

Finding the right home affordable refinance program can be challenging, because the world of home loan refinancing is a complex and ever-changing one. However, for those who are stuck in a mortgage with a high fixed rate, or need to refinance in order to get some cash, they could be the perfect solution.

Refinancing a home on the surface is very simple. You apply, and get approved for a new home loan, with terms that are more favorable for you, and then use that home loan to pay off the original mortgage, so that you are left exactly back where you started, with a better rate, or different terms.

One of the major reasons that people refinance is in order to take advantage of a previously unattainable fixed rate. For instance, many people with credit problems get a home loan that has a very high A.P.R. Later on, when they have improved their credit score to the point where they can qualify for a lower interest rate, refinancing gives them the chance to do so.

Another reason for a refinance is that they simply need cash for some reason. Some use the money to actually make improvements which increase the value of the home. Whatever the reason, refinancing sometimes allows there to be money left over after the prior home mortgage has been paid, and the new loan terms have been met.

There are a few things that you should know about refinancing a home if it is something that you are considering. The first thing that you will need to be aware of, is that even though you may have had a certain type of home loan prior to the refinance, you have a whole new world available to you and can choose a different term, or a different type of mortgage if you want.

Time, as it relates to your mortgage is one of the most important factors in deciding whether or not you should refinance, and what sort of terms you should look for when you do decide to refinance. You must evaluate the time that you have already spent paying your mortgage and the amount of money that you can pay each month towards it, and be aware of the amount of time that it will take to pay off the mortgage.

You should also be aware that you will have to pay closing costs again, and the down payment as well. In fact, if you can manage it, and you aren’t trying to retain cash for home improvements or other expenses, you might want to make a large down payment so that you will pay less interest.

You should talk with your local banker if you want the facts on refinancing, or a financial advisor that you trust. Beware of those who are actually providing the home affordable refinance program, as they may not tell you everything that you need to know.

I’m a loan advisor specializing in home affordable refinance programs.

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