April 19th, 2009
Refinance Rates and Your Total Mortgage Benefit
Too many times, homeowners will shop for a new mortgage with only one thought in mind, how much is the refinance rate? Now of course, this is an important consideration, but digging deeper, you may find that refinance rates are not the holy grail for your new home loan.
For instance, if you are just refinancing your mortgage, you will most likely get a better refinance rate than for a program qualified as a cash-out refinance. The loan-to-value (LTV) ratio will increase and most mortgage lenders charge a bit more for a consolidation loan scenario. So, you decide not to consolidate and just refinance your mortgage because your refinance rate is one-quarter point lower. The thing is, the debt consolidation would save you an additional $400 per month, even with the higher refinance rate. Depending upon your timeframe and incoming cash flow, debt consolidation loans may be the much better deal, even if the refinance rates are higher than that of a regular first mortgage refinance.
