Making the decision of whether to refinance or not can be one of the most crucial and daunting tasks. Being a single mom, your adjustable rate mortgage has maybe jumped up a few points. On top of that, your kids might be off to a new school or college. Or maybe you have plans to revamp your kitchen and are in need of some extra funds. There can be several reasons for financing a mortgage. We show single moms the right direction to head when it comes to refinancing decisions, so you can make the right decision for you and your family.
When you intend on refinancing your mortgage, you take out a new home loan and use a portion or all of the proceeds to pay off the current one. This process has its own intricacies but is easier than attaining your first mortgage. Before any single mom makes a decision, it's important to understand where you plan on getting your mortgage from. Then you have to be conscious about the types of loan you qualify for, their respective rates, and the expenses you will incur to get these loans. Figuring out whether refinancing is the right decision for you is the most important factor.
The first few tips we offer are quite important before considering any refinancing options. Be sure to start off with comparing several lenders available in the market. Once you actually get out and see what options you have, it's easier to make a better and educated decision. Secondly, determine the costs involved in applying for your new loan. You should be completely aware of the expenses tied with the process. Avoid extending the loan term because you will have to deal with the burden of re-payment for a longer time. Last but not least, include lost tax advantages when you are calculating your payback amount. This can considerably bring down the amount of money you have to pay.
There can be numerous reasons to refinance a mortgage. What a single mother needs to keep in mind is that refinancing should be done only if it makes sense in the long run. So if you want to shift from an adjustable rate to a fixed rate, you can consider refinancing. If you already took out an adjustable rate mortgage, it would be prudent to refinance if rates are increasing.
If you're interested in lowering your interest rate, it might be favorable to refinance. Since the previous mortgage you took out had higher rates than what they are currently, it would be beneficial. Refinancing can be an option if you want to consolidate your debt, alleviate cash flow problems, or get cash from the equity in your home to use for any purposes regarding you or your children.