Stop losing money in your house refinancing!
This post is my entry to Problogger’s How To Writing Project of this week.
Are you going to refinance your house later? Then you must pay attention on the tips that I listed here. The following “How to refinancing tips are some of the summary of my after reading note book that I collected when I read the refinancing books from time to time. Although the tips are simple and no technical explanation here, but I believe they sure will give you a rough guidelines how to refinancing your property without losing money to bankers.
- Know the impact of interest. A 10% interest is a lot of different with a 9.9% in long run
- Know and understand the mortgage products on the market. ARM? APM? Balloon Rate Mortgage?
- Know and understand the technical terms of Mortgage world. For example, what is the meaning of 3/1 or 3/3.
- Collect and compare all the mortgage packages and offers. I think Internet will be your important tool right?
- Learn and calculate all the offers. Mortgage simply a mathematic subject of our life. I think this is why we learn mathematic in school
- Train your mind and read the micro/macro-economy of your country. This is important if you want to be an investor who always predicts the trend of market and mortgage rate.
- Bargain, Bargain and Bargain!! People love bargain
- Pay attention on the closing cost. Be careful, there might be a trap here.
- Make a decision on time. Don’t wait once you make your decision. Deals may change without your notice.
Last but Not least : Test, fail and learn from experience. Maybe failure is hurt, but you learn the most from it. 
Refinancing - Some Simple Formula for Refinancing Calculation
There is a rule in the world which every one of us knows - There is no free lunch in this world! Everything, every action and every decision we make in world of investment will cost you money. This is the expenses that we cannot skip but we can play around it to make it lower.
In refinancing, whether you refinance your mortgage to get a better deal, or refinance to get some cash from your home equity, you must pay attention on the fees of the refinancing process.
OK. To get the answer for those questions, you can simply pay attention on the “Break-even period†- the period where the interest you save just cover the refinance cost.
To know the “Break-even periodâ€Â, you can use the following formula:
Break-even period = refinancing Expenses / (Old Monthly Installment - New Monthly Installment)
To know the total money you save from refinancing, you can use the following formula:
Total Money you save = Money you save from refinancing - money you pay for the refinancing expenses.
PS: Money you save from refinancing is the total money you save from refinancing. You should add the saving in monthly installment and the different between new loan balance and old loan balance. Due to the lower interest rate in the new loan, the loan balance will totally different.
Debt Control - Mortgage Refinancing
Mortgage Refinancing loans are getting more and more popular because of its attractive lower interest rates. There are 3 primary reasons people refinancing their mortgage loan :
- To take advantage of lower interest rate
- To convert some of the equity in their homes into cash.
- Convert from an adjustable-rate mortgage(ARM) to a fixed-rate mortgage
Although refinancing your mortgage sometimes is a good idea but in certain condition, it is also not advised. Each situation is different, so you’ll have to calculate for yourself whether it is worthwhile to refinance.
Refinancing your mortgage means trading in one mortgage for another. The refinancing option can be a good idea if:
- The interest rate on your mortgage is higher than current prevailing rates
- Your mortgage carries an adjustable interest rate that has been trending up
- Your new mortgage loan is 80 percent or less than the value of your home. In this way, you don’t have to pay for PMI (Private Mortgage insurance)
You must be careful if you intend to refinance your mortgage to pay off other debt. You could ruin your life if you aren’t careful. You only can refinance your mortgage to repay other debt only if you’ve made the commitment to top borrowing and remain debt-free. If you can’t resist the temptation to into debt again, then you better don’t take the risk.