Refinancing your Home

Today interest rate is still low. Today 30 year fix is about 4.625% (freeRateUpdate.com). Therefore, refinancing home seems very attractive. Before you do that, there are 3 things you have to consider.

1) Your credit score
The very first thing you have to do is get your credit score from Experian, Equifax and Trans Union. You have to qualify yourself for the best terms of loan. If there are any errors on your credit report, either you can follow the instruction on the report to fix it by yourself, or heir some credit report agent to fix it for you. Improve your credit or fix your credit in order to get the best deal.

2) Today your home value and equity
You have to concern that is your home value and equity enough for you to refinance the home. If you purchase a home just a few years ago at top of dollars, it may have a problem for you to refinance. It may find out that you owe more than you own because in your area the real estate market drop the percentage higher than the others. You are not qualifying for refinancing.

3) Calculate how much you really save
The last thing I want to remind you is, do you realize that you always have to pay very heavy interest in the beginning of the years. You only got very little principal at those years. Later on gradually your payment of interest part goes down and your principal amount that you earn goes up.

For example: Loan amount — $90,000
Interest rate — 8%
Term of the loan — 30 year

So your monthly mortgage payment is $660.39, annual is $7,924.68
Total interest in the 1st year you paid is $7,172.83,
Total principal in the 1st year you earned is $751.82

Total interest in the 2nd year you paid is $7,110.43
Total principal in the 2nd year you earned is $814.23

Total interest in the 20th year you paid is $4,504.44
Total principal in the 20th year you earned is $3,420.24 and so on.

From the Pattern above, you can see how your mortgage payment split each month during the whole terms. Therefore, you really have to consider in your situation, if you refinance your home, is really save you anything?

Reaching out to others in the real estate community and sharing ideas is the goal of this blog, so please do not hesitate to reach out to me. All comments are welcome. Also, please feel free to email me at anytime at dianawu883@gmail.com

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• Manhattan Real Estate Glossary – Types of Rooms

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• Manhattan Real Estate – the Best Time to Buy

• New York Homeowners: Sale your home at TOP Dollar
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