| Even though rates are on the rise, that | | | | the second loan. Others simply want to |
| doesn't mean you shouldn't refinance. | | | | consolidate into one loan that would be |
| | | | easier to keep track of. Either way, |
| Practically everyone has refinanced or | | | | refinancing into a fixed-rate isn't a bad |
| thought about it at one point in time. We've | | | | idea. And one payment is easier to make on |
| seen the dozens of commercials that urge us | | | | time each month than two. |
| to do it. With rates at record lows over the | | | | |
| past few years, refinancing has helped many | | | | Those out there with adjustable-rate |
| borrowers lower their monthly payments. | | | | mortgages are starting to get a little |
| | | | nervous. Interest rates have been rising |
| But rates are now on the rise. Refinancing | | | | pretty fast. The gap between the rate of a |
| applications have fallen slightly. Most | | | | adjustable mortgage and a fixed mortgage has |
| people don't think you should refinance when | | | | narrowed so much that you really don't save |
| rates are going up. However, many | | | | much by taking the adjustable mortgage. Many |
| refinancings are "cash-out" refinancing. That | | | | are looking to avoid rising interest rates by |
| means that equity is handed over to the | | | | financing to fixed-rate mortgages. |
| homeowner in return for a larger mortgage. | | | | |
| Many people need that cash. | | | | Refinancing can be a good thing. You can get |
| | | | a fixed rate to counter the rising interest |
| Some people are refinancing their homes for a | | | | rates. You can use cash from a refinancing to |
| "cash-out" because they have a significant | | | | consolidate your debt. You can improve your |
| home-equity line of credit balance. This line | | | | home. But you should be careful about taking |
| of credit has an adjustable-interest rate, | | | | too much equity out of your home. |
| which is going up on them. They refinance it | | | | |
| in with their first mortgage at a fixed rate. | | | | Many advisors warn consumers not to use their |
| They aren't eliminating the debt, just fixing | | | | homes as personal piggy banks. If home prices |
| the interest rate and monthly payment. If you | | | | decline, you could owe more than your house |
| don't need the revolving line of credit, you | | | | would sell for. In a cooling, or slowing, |
| should probably take advantage of the fixed | | | | real estate market, you do not want to be |
| rate. | | | | maxed out on the equity in your home. If |
| | | | something happened and you had to sell, you |
| There are many homeowners that piggyback | | | | want to walk away from the closing table with |
| their mortgages when they are buying. They | | | | money, not have to go to it with a check. |
| end up with one mortgage for 80% of the value | | | | Paying to sell your home isn't how you want |
| of the home and a second mortgage for 10%. | | | | to do it. |
| They put the remaining 10% down on the home. | | | | |
| Since the first mortgage is only for 80% of | | | | Fixed-rate mortgages are always a good and |
| the purchase price, they avoid having to pay | | | | solid financial choice. Anytime you are |
| PMI. | | | | looking to refinance, your best option is to |
| | | | go with the shortest-term, fixed-rate |
| Many piggybackers have a line of credit as | | | | mortgage you can afford. |