Get the most out of your savings from a home refinance

Although lowering their interest costs is a primary objective of homeowners who refinance their mortgages, a number of other critical factors should also be considered in order to realize the greatest savings through a refinance.


The median household that does not refinance could lose out on an average of $11,500, according to the National Bureau of Economic Research. Besides the obvious lure of reducing the cost of your monthly payments, some other factors to keep in mind when refinancing are:


    1) The total cost of refinancing
    2) When you will begin to save money each month
    3) The length of the new mortgage term
    4) The new mortgage payment
    5) What to do with the monthly savings


To find out how many months it will take to pay off your refinanced loan, take the total cost of your refinance and divide it by the monthly savings after you refinance. Using a refinance calculator like the one at HSH.com can help you determine the length of time it will take before you can start to see a tangible savings.


Are you going to take a shorter or a longer term on your refinance?  Figure out how many years you can cut from your mortgage term by making your “old” payment on your newly refinanced mortgage. If your “old” mortgage has 25 years remaining, and refinancing at current rates lowers your monthly payment by $400 each month, then apply your old cost to your new monthly payment (i.e., prepay your mortgage an extra $400 per month) to see how soon your mortgage is paid off.  By paying an extra $400 each month, you could likely pay off your mortgage in fewer than 25 years. This could end up saving you thousands of dollars, at least.

source: smarterlifestyles.com

Obama urges passage of mortgage relief

WASHINGTON - US President Barack Obama on Saturday urged Congress to approve his plan to provide relief to millions of homeowners who are having trouble paying mortgages.

"In order to lower mortgage payments for millions of Americans, we need Congress to act," Obama said in his weekly radio and Internet address. "They're the ones who have to pass this plan."

The $5-10-billion plan, showcased by Obama this past week, would be financed by a portion of a fee on the most wealthy US banks.

The blueprint is intended to help borrowers who are up to date on their mortgages to refinance and take advantage of low interest rates, which could save an average of $3,000 a year.

It will simplify mortgage disclosure forms, so people can better understand the loans they take out and offer support to help those facing foreclosure to stay in their homes.

The plan also includes a government-led effort to make foreclosed properties that cannot be sold available to renters.

Obama urged people who agree with this plan to call, email or visit their representatives in Congress and demand its passage.

"Tell them to pass this plan," the president said. "Tell them to help more families keep their homes, and more neighborhoods stay vibrant and whole."

He cautioned, however, that "it will take time" for the US housing market to recover and for the economy to fully bounce back. — Agence France Presse

source: gmanetwork.com