If you read it correctly, that is close to a million dollars.
There are many people reading this article who are not aware that the decision they are taking now is the best. How many people reading this article just went to the first bank, building society or broker and asked for a home loan without knowing that the decision you make at this stage could prove to be the difference between paying out $916,000 and, say, $700,000?
In Victoria where the average home loan is $260,000 the figures are around $680,000 to pay out the loan and with the right advice you could reduce your total payments to around $370,000.
You have all seen the half baked guru's on television telling you that by paying just a little more you can save a lot. We are talking about paying less each month as well as making the savings we refer to above. That's a double whammy winner in any language.
By now you should be questioning whether you are going to boost your bank's profit margin or choose to reduce your own payments. This choice is yours to make if you are serious and get the correct advice and how to do it.
The biggest advantage to have come with the freeing up of the Australian home loan industry is that there are brokers out there who are prepared to tell you, and show you, everything the big banks would feel happier that you didn't know. We are pleased to have many of these brokers on our approved panel.
At this stage it is best that we make you aware that the type of loan we are discussing in this article will not be available, or suitable, for everybody. The good news is that if it is not for you right now it will almost certainly be for you in a few years when you have built equity in your property and a good broker is able to put you into a loan that will enable you to transfer to this type of loan without penalty at some later date.
You got your home through a loan a couple of years back. It seemed like the best thing to do since you have a growing family and you needed to put a roof over their heads. Times have changed and you are in different circumstances now than you were before. A question rises to your mind and you ask yourself the question, "should I refinance home loan today?"
There are a couple of things that you should consider before going through with it. Perhaps the first and most important would be the reasons you should get a refinance. Listing them down in a piece of paper should help you see the problems, situations, and also the advantages that would make you even think of getting a refinance.
Lower Monthly Payments
The first entry on your list or anybody's list would be to lower monthly payments. Everybody would love to have that. So how can you, if it is possible, lower monthly payments by getting a refinance home loan? The answer would be by getting lower interest rates.
Back when you first got your loan, the interest rates may have been high, but you took it, anyway. Now, the interest rates have gone down significantly, making you wonder if it's low enough for you to save on a refinance.
As a rule of thumb, you should only refinance when the interest rate is lower than 2% of your current ones. Together with other factors such as staying in your home for then next couple of years, you should be able to lower your monthly payments and save from a refinance home loan.
From ARM to Fixed Rate Mortgage
You may have taken an adjustable rate mortgage (ARM) back then. It is quite tempting over the fixed rate mortgage since the monthly payments for this is usually lower at the beginning of the loan. But as it matures, your payments would also gradually increase, depending on the current interest rates.
You may have never had a stable monthly payment where you were able to predict what the numbers would be even before you opened the envelope. It was bearable back then, but now you may not be able to cope with your bills that seem to rise and fall according to it's whims.
With a refinance home loan, you will be able to switch to a fixed rate mortgage, making sure that your monthly payments will stay the same from the start to end of the loan. This would prove to be an your advantage, especially if you are on a tight budget.
From Fixed Rate Mortgage To ARM
There are also situations wherein you first applied for a fixed rate mortgage and now you want to switch to an ARM. People would think this an odd move, but what they don't know is that it can work to your advantage.
Say you are planning to stay in your house for a few more years. You can save from your loan payments by switching to ARM. This would only help you for the short-term, so better be sure that you will only be staying in your house for a year or two.
Make sure that you also get an option of "no out-of-pocket costs" ARM. You will be having a slightly higher interests rate but with no closing costs, making you reach your goal of saving on your monthly payments now.
Study The List
Once you have made your list of advantages and disadvantages of getting a refinance, study them. If the longer list belongs to the side of the advantages, then you should go ahead and get a refinance. If it isn't, then you should leave your mortgage be, for now.
There are many reasons to get a refinance home loan. When everything has been laid out before you, it is still your decision if you should go through with it. Just remember that, whichever way you go, you have to make sure that it is for the best.
Both David Mccarthy & Rony Walker are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
David Mccarthy has sinced written about articles on various topics from Finances, Lose Weight and Family Concerns. This article is part one of a two part article and you can read part two now at: This article may be reproduced in its enti. David Mccarthy's top article generates over 12100 views. to your Favourites.
Rony Walker has sinced written about articles on various topics from Finances, Breast Cancer and Mortgage. Thinking of a . Whether it's a. Rony Walker's top article generates over 165000 views. to your Favourites.