Re-Financing with Shorter Loan Terms

Re-Financing with Shorter Loan Terms

Untitled Document

For some homeowners there is the possibility of making a sound re-financing decision even when interest rates are stagnant, the homeowner does not have a great amount of equity in the home and the homeowner's credit score has not increased significantly. You might wonder how this is possible. It certainly isn't an option for every homeowner but those who can afford to pay significantly more each month can yield huge financial benefits by refinancing their loan terms from 30 years to 15 years. The benefits which may result from this type of re-financing include a significant overall savings, the ability to gain equity quicker and the ability to repay the balance of the loan quicker.

Higher Monthly Payments Increase Overall Savings

Re-financing with shorter loan terms is definitely not an easy option but homeowners who have a large monthly cash flow or who receive a sizable promotion at work might be able to consider the possibility of re-financing by decreasing the loan terms from 30 years to 15 years.

The result of this type of re-financing will be a significantly higher monthly payment which is not conventional but can be worthwhile if it meets the needs of the homeowner. In particular this type of re-financing option is a viable solution if the homeowner can afford the increase in monthly payments and has an overall goal of reducing the amount of interest they will pay over the course of the entire loan.

Reducing the amount of interest is critical to the overall savings plan because the homeowner does not have the option of reducing their original debt but they can drastically reduce the amount of interest paid over the course of the loan. Consider two loans with a 5% interest rate. One loan is to be repaid over a period of 15 years while the other loan is to be repaid over a period of 30 years. It is clear that in this example, the homeowner with the 30 year mortgage will pay more during the course of the loan.

------------------------------------------------------------------
How To Set Up A Family Budget?

If you have had financial problems in the past, you can feel relief when you start over with a (realistic) family budget.

Have you ever heard, “The first step is admitting there’s a problem?” You may or may not have a spending problem – but you can’t create a family budget without first being honest with yourself.

And let me tell you it feels good. No matter what you’re financial situation. Sitting down and figuring out exactly where you stand. How much money you owe. How much money you need to save up each month.

How much money you get to spend each month.
------------------------------------------------------------------

Today's Article

How to arrange finance for buying car?
when one has completely made up his mind that what he needs to buy and how much does he think he can afford. For having the best prices one can look around, compare the quotes and finally zero on the one which gives the best deal, with low...

Equity Gained Quicker

Another major advantage to re-financing by reducing the loan terms from 30 years to 15 years is the ability to gain equity in the home at a significantly faster rate. The amount of the equity in the home is equal to the amount of the principal loan which has already been repaid by the homeowner. Under a conventional loan, the homeowner typically pays a combination of principal and interest with their monthly payments. The amount of the principal which is repaid on two mortgages for the same amount and with the same interest rate will be different if one loan is a 30 year term and the other is a 15 year term. The homeowner with the 15 year mortgage will be paying more of the principal each month and will therefore be accumulating more equity each month. Gaining equity in the home quicker is ideal because it gives the homeowner greater flexibility. The equity in the home can be used for a number of purposes including home improvement projects, travel, educational pursuits and small business ventures.

Loan Repaid Quicker

One advantage of shortening the loan terms, which cannot be denied by some homeowners, is the ability to repay the loan quicker by re-financing to shorten the loan terms from 30 years to 15 years. In this case the homeowner will have completely repaid the home loan a full 15 years earlier than they would have under the conventional loan. This is advantageous because it can enable the homeowners to enjoy living mortgage free a full 15 years earlier. Once the mortgage is fully repaid, the homeowner may be able to make significantly more sizable contributions to his retirement plan. Some homeowners may even be able to afford to retire once their mortgage is repaid in full. This ability can have a significant impact on the quality of life for the homeowner. Homeowners may find themselves with the financial means to travel, assist family in educational pursuits or invest in a small business.

Today's #1 Resources

Car loan with no credit
The present market activity has brought to you an opportunity to apply for a car loan also having no credit history. It is no more difficult to face the deal for you. You can have your dream car so easily and you don't need to worry for...

Sallie mae loan consolidation
When your student loans get the best of you and you're wondering how you're ever going to get out from under all that debt, take a look at loan consolidation. It may be the answer to a number of your problems. Turn to Sallie Mae loan...

Find More Articles And Resources From www.mymortgageresource.info

Only The Best Products

Guaranteed Bad Credit Financing. Receive A Loan Or Credit Card Even With Bankruptcy!
Quickly & Easily!

Access Loan. Bad Credit Loans To Change Peoples Lives. Now You Can Earn 75%,
Get Your Loan

Government Grants And Loans. The Best Selling Government Grants And Loans Insider Secrets.

Untitled Document

LoanCare Servicer Ratings Downgraded Again

Moody's Investors Service said that it lowered LoanCare Servicing Center Inc.'s servicer quality rating for prime mortgages to SQ4+. Moody's attributed the downgrade to the bankruptcy filing of the company's parent. Last month, Fitch Ratings announced it lowered LoanCare's prime servicer rating.

Fed Becomes Mammoth Secondary Player

The Federal Reserve Bank of New York said that it has begun purchasing agency-guaranteed mortgage-backed securities. The plan calls for the purchase of up to $100 billion in direct obligations and up to $500 billion in MBS. The fed also created an operating subsidiary to acquire nearly $40 billion in residential MBS from American International Group Inc.'s U.S. life insurance companies, a recent press release said.

Untitled Document