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Looking to refinance
That’s it, I’m looking to refinance. Initially quoted me a 30-year fixed at 6.5% in March, but when the underwriters got through with me it was a 30-year interest-only with 8.25%. Not happy! Nevertheless, my lender – LendingTree.com- grants returning customers a refinance at NO costs.
The general situation is here. Any advice appreciated.
I owe CC debt approx $60K (AVG. APR 6.5%)
I have Interest only Home loan (8.25% $366K, 100% financing)
I earn 7K/month
Net Current monthly liabilities $6,200 (cc payments, mortgage, insurance, etc)
I have cash of $20K
Credit score 680What to do with the cash? Am I to pay off some of my CC debt to boost my credit score or make a down payment to get a better mortgage? How about buying points, and which way is the lending market looking to go within the next 6 months?
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1 Reply
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If you consider your present financial situation to be comfortable, your approach would be to look at refinancing options. Here’s a breakdown of your options and some advice tailored to your circumstances:
Present Summary OF Finances
Debit Obligations of a fax (or credit card) $60,000 present rate of 6.5 percent per annum
Interest Only Home Loan: $366,000 interest only…
Monthly Cash Inflows: $7,000
Monthly Cash Outflows: $6,200
Cash On Hand: $20,000
Credit Score: 680 Asset Report Score: 680
Key Note Cont….
PayOff Of Credit Card Balances
Societal Effects: Credit card holders who are in debt will be able to reduce the outstanding debt with high proportion of the chances of decreasing the credit utilization ratio which influences the credit score. As a rule of thumb and as a good practice it is ideal to keep your debt to within 30% of your credit limit.
With this amount try to use a fraction of your cash availability to pay off your credit card balance. This means that paying off a loan or a 20,000 dollar debt could enhance your worth plus credit rating, thus making you attractive to the refinance lenders.
Notice regarding the mortgage
People have a very general impression that refinancing house loans is perhaps the most simplest thing to get done these days, which isn’t exactly false as the current interest rate is 8.25 although it is advisable to always look around for better offers. Loans happen to differ a lot from one lender to another. The terms and conditions in lending may also differ. Thus refinancing may be a good idea.
The difference between interest only loans and fixed loans: As done in the first, fixing yourself in a 30 yr fixed mortgage may come in handy one day in the future. One thing to note when doing this is that, paying back home loans is never a simple process and will cause certain levels of abrupt change in the future, especially when initiating payment on interest only loans.
How to raise funds for an investment
For selling all your money into a down payment leaves no wiggle room for emergency expenditures This option lowers the rate of interest a lender charges. Where it gets interesting though is If you want to refinance a normal loan mortgage mortgage you can put down some cash and that would help bring down your loan balance to satisfactory limits.
Funding Points
Key Learning: Buying points means that you are going to pay more upfront, but your interest rates will go down and so will your monthly payments. Considering the lifetime expense of the mortgage or loan, this choice might be good for the long run as it will be cheaper if you decide to stay in your home.
Analysis of the cost factor: So the next question is how do determining rate cuts influence monthly high balancer alongside points cash? Ask yourself if this is of any use to you.
Market Trends
Future of Interest Rates: From the lending board, a good rule of thumb is to allow for the more narrow the gap, expect less rate volatility as the next six months elapse. Inflation will be controlled but be careful about the economic strategy as well as rate cuts by the federal reserve.
Recommended Actions
Credit Card Balance Remediation: If you have some cash reserves, consider using them to reduce your credit card debt history with a hope of achieving a lower utilization ratio.
Trying to find and work with new lenders: A decent score boosts your chances as you will have the option of working with multiple lenders and this will enable you to find more competitive rates on the conventional mortgage loans. Fixed and adjustable options may also be available.
Retain Cash surpluses Ensure that you set aside some of your funds in your account due to any unexpected occurrences now and after the debt pay off perhaps a few thousand dollars should suffice.
Get in touch with a financial advisor: Contact a financial expert such as a mortgage planner or broker to explore your options with regard to refinancing that meet your specific requirements with the right organizations.
Of high interest, however, will be the credit card debt that you owe to the lender. Many people begin by paying off their credit cards first, and this is effective because it relieves them of the burden imposed by repayments. This, in fact, puts you in a better position to consider refinancing of your home mortgage for more favorable terms. Carefully examine your potential options and do not be afraid to ask for help with professionals.