With interest rates going up, you might need a second mortgage or to refinance your first mortgage to keep your housing costs from going through the roof. Lynn Brenner asked, "How can you save money on your mortgage?" in a recent article for Parade magazine called "How to Save on Your Mortgage."
"Will the rate on your mortgage go up?"
"If your mortgage rate is fixed, you don't have to worry about anything. But millions of homeowners are sitting on a financial time bomb: their monthly payments are set to skyrocket sometime in the next 18 months. These people have hybrid adjustable rate mortgages (ARMs), which have a fixed rate for the first three to ten years but then change every year.
"Let's say you bought a $200,000 three-year hybrid adjustable-rate mortgage (ARM) home in 2003. Your rate was about 3.8% for the first three years, and your monthly payment was $930. Greg McBride, a senior analyst at the personal finance site Bankrate.com, says that this year, your rate could be changed to 7.3%. So, your monthly bill could go up to $1,334."
Brenner continues by suggesting that, "If your mortgage rate is going to change this year or in 2007, you might want to think about refinancing. You can save money by getting a new loan with different terms and paying off the old one. Not everyone, though, makes sense to refinance. If you plan to move in a year or two, for example, you might not be able to save enough to pay for the costs of refinancing, which are usually between 1.5% and 2% of the loan.
"If you plan to live in your home for at least 10 years, it's worth paying more for a fixed-rate mortgage so that your rate doesn't go up. A hybrid adjustable-rate mortgage (ARM) is a little cheaper, but your rate could go up in the future, so look for one with a fixed rate that lasts as long as you plan to live in the house."
Fixed-rate second mortgages have a lot of advantages.
Refinancing a first mortgage can cost more than getting a second mortgage with a fixed rate. They usually have lower annual percentage rates (APR) than other ways to borrow money, and the interest they pay is tax-deductible, so they can save money on their taxes. Second mortgages are also easier to get than loans or lines of credit that don't have to be paid back.
A second mortgage payment is made up of both the principal and the interest, just like a first mortgage payment. Unlike a first mortgage, nothing is put into escrow to pay for things like homeowner insurance, property taxes, and Private Mortgage Insurance.
Applying for a second mortgage is often faster and requires less paperwork than refinancing a first mortgage. Applying online from the comfort of your own home is safe and sound.
Mortgages are like products.
Mortgages are products, just like cars or new furniture for the living room, but they cost a lot more. A home is often the most expensive thing that people ever buy. Get information from more than one lender before you sign the loan papers. Compare all the important details, such as interest rates, discount points, closing costs, legal fees, title and insurance, etc.
If you have bad credit, your interest rate will be higher, but the Equal Credit Opportunity Act says that you can't be turned down for a loan because of your race, colour, religion, national origin, sex, marital status, or age.
Go to www.easysecondmortgages.com to find out what the current rates are for mortgage refinancing. Check out www.easymortgagerefinancing.com to get a quote for a second mortgage that is competitive.
