Refinancing of interest only loans simply means swapping one loan for anew one. It is an effective way to decrease the debt on existing loans. This is particularly beneficial if the current interest rates are lower than the interest percentage you are currently paying on the loan. Refinancing would enable you to convert your high interest debt into a low interest debt, as the total monthly payment would become lower.
The extra cash saved can be used in something more profitable such as real estate or stocks, or to pay off high-interest debts like credit cards. Refinancing is additionally done for converting an modifiable rate mortgage into a fixed rate mortgage.
Refinancing has turned out to be very common in recent years that approximately 75% of new mortgages were refinanced loans in 2003.
Refinancing of interest only loans is very striking, especially when the period comes for the loan to get paid back. That signifies the loan will have to be paid off at the present interest rate, along with the principle. Many people search to refinance their interest only loan in order to buy more time, i.e. to postpone the repayment of the principle further.
However, this may also increase the risk on the loan, since the interest rates may go up further, the cost of the house may come down or the financial situation may slump soon.
Refinancing of interest only loans is suitable for people who are anticipating big capital earnings in the next few years or are intending to market their house by the time the interest-only period is over. This is a good option as long as the financial situation is good, the interest rates are steady and the prices of houses are rising. Interest only refinancing is ideal for individuals who have variable incomes such as commissions or bonuses or people who are expecting a hike in their income in the future. The savings accrued from refinancing may also be spent for home renovation, which will increase the value of the home in the future. - 30462
The extra cash saved can be used in something more profitable such as real estate or stocks, or to pay off high-interest debts like credit cards. Refinancing is additionally done for converting an modifiable rate mortgage into a fixed rate mortgage.
Refinancing has turned out to be very common in recent years that approximately 75% of new mortgages were refinanced loans in 2003.
Refinancing of interest only loans is very striking, especially when the period comes for the loan to get paid back. That signifies the loan will have to be paid off at the present interest rate, along with the principle. Many people search to refinance their interest only loan in order to buy more time, i.e. to postpone the repayment of the principle further.
However, this may also increase the risk on the loan, since the interest rates may go up further, the cost of the house may come down or the financial situation may slump soon.
Refinancing of interest only loans is suitable for people who are anticipating big capital earnings in the next few years or are intending to market their house by the time the interest-only period is over. This is a good option as long as the financial situation is good, the interest rates are steady and the prices of houses are rising. Interest only refinancing is ideal for individuals who have variable incomes such as commissions or bonuses or people who are expecting a hike in their income in the future. The savings accrued from refinancing may also be spent for home renovation, which will increase the value of the home in the future. - 30462
About the Author:
Jason Myers is a professional writer and he writes mostly about loan refinancing online. He's also interested in lower mortgage offers.
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