Reasons For Refinancing Your Home Loan | Compass Hawaii

1. Reasons For Refinancing Your Home Loan Refinancing a home loan simply means taking a new loan from another lender to pay the existing one. Then the question arises, ‘why refinance my home?’ There are two possible answers. First is to receive the benefits of lower interest rates and the second is to receive discounts for early pay-offs on the initial loan amount. Apart from this, there are many other reasons for refinancing a home loan. 1.Saving the money paid in the form of interest It is highly possible that the lender of your home loan is charging higher interest rates than other lenders. One reason people opt for refinancing is to save the interest money. Also, interest rates will change time to time. Some lenders charge you according to those changes while others do not alter high rates, even if the market interest rates have dropped. In this scenario, loan borrowers turn to those who are flexible with interest rate fluctuations in order to refinance their home and save a remarkable amount. 2.Transferring from floating rate loans to fixed rate loans and vice versa Some people may have taken a home loan with high floating interest rates and want to go for fixed rate loan in order to be certain about the amount of EMI to be paid monthly. Some may have taken a fixed rate loan which of course comes with a high interest rate and found floating rate loans with relatively cheaper rates more beneficial. In both these scenarios people go for refinancing.

2. 3.For getting additional loan amount The loan amount is sanctioned according to the valuation of your property. As we all know, the rate of homes always increases with time. If you refinance, the value of the property will be assessed according to present rates and loan amount will be sanctioned. This means that you will get an additional loan amount added to your original loan. 4.Services of current lenders are not satisfactory If the bank from which you have taken a home loan is not providing satisfactory services, for example, not issuing loan statements on time, slow responses to interest rate changes in the market, or having poor customer service, then you can choose another bank for refinancing; one which offers excellent services to customers and provides the fastest home loan. 5.Increase or decrease in borrowers income If your income decreases or if you face any situation which makes it difficult for you to pay the EMI, then you can take a refinancing home loan with longer tenure. This loan will reduce the EMI amount to be paid monthly. Whereas, if your financial condition is better than that of at the time of taking loan, then you can opt for a refinancing option with shorter tenure to repay your loan sooner. These are a few of the important reasons people think of refinancing their home loan. While going for refinancing, make sure to keep the following in mind. 1.Refinance your loan at the earliest of the tenure, otherwise you will have already paid a huge amount in the form of interest. 2.Get the clarifications about the processing fees and other charges of the new lender 3.New banks treat your application as a fresh application. You will have to go through a verification process once again. 4.Make sure your current lender transfers all the necessary documents to the new bank in time. So, if you are having any of the above reason and understood the things to be taken care of, then you can refinance your home loan with the bank which you think is suitable for your needs. Source URL: https://goo.gl/NB9cHP