Remortgaging: The Pros
REM had a song years ago that pretty much summed up how many of us are feeling. It was entitled: “This is the End of the World as We Know It” and though the song spoke to very dire times it seems to apply quite well to the world we live in – at least to a percentage of us. We go through life trying to make all of the right choices and financial decisions to just have it fall on us like a rock from the heavens. This is not justice for those of us that work extra hard to make it in this life. There are some very good people who are fighting tooth and nail to remain in the homes they worked very hard to but thanks to a number of things that may not be possible.
Interest payments rising after the initial rates expire and there are only two choices that a homeowner can make: file bankruptcy and hope for the best or the alternative is to let your bank seize your home then resell it to get the money back that they lent.
The second option is to remortgage to get a better deal than your current mortgage.
Buying this home meant that you had to scrimp and save and pinch every penny that you could. It is not easy trying to build up a savings in this day and age of fancy gizmos, expensive cars and electronics we simply do not need. We cut corners on our spending patterns as much as possible even if that means shopping at Aldi, buying a used car or getting a house that needs a lot of repairs. We put all of this money in a savings account so it can earn interest. We seek the will of a tax professional so he can hopefully find all of the loopholes so that we can save money.
Looking for a loan or whatever is no different than buying a car. You would very rarely buy a car without driving it first let alone seeing the paper on the vehicle first – that would be financial suicide. We shop around for the best possible rates and then we strike. It is in the nature of human kind to try and find the best way to do something. It does not matter if we are talking about dating or making mash potatoes. We buy things on impulse because we worry and then argue to ourselves that we will not get a better deal so we settle and pay for it later on down the road. We have a tendency to regret these choices but soon realise that the payments or interest rates alone are costing us a lot more than if we had just wasted and shopped around more. We take the leap at the first low price we find instead of waiting a little bit longer for fear of that number jumping up higher. Buying a home and getting a mortgage is a lot like playing the stock market but in reverse: sell your home high, remortgage low.
Having the ability to remortgage affords you several advantages:
Debt
If you have equity in your home then you can remortgage that property at, hopefully a lower interest than what you are currently paying. You can use this money to consolidate bills to get other nagging debt off of your back. There is no need to live with the anxiety of multiple loans. These can be loans for another house, a car, university fees and even child care.
Lower Payments and Interest Rates
If you wait for an upturn in housing and a down turn in interest rates then remortgage. What happens is your bank (and other lending institutions) will fight amongst themselves to have you as a customer. Your interest rates will decrease and your monthly payments will also decrease. Your financial burdens will certainly be a lot less so you can enjoy your life more. But always remember to read the fine print or suffer a negative equity mountain in a few years.
Remember that the housing market is in a very low period right now so selling a house is nearly impossible. It is a dire situation with many tragic outcomes over the last 1 or 2 years. There are no signs at this moment that gives a hint to the hemorrhaging stopping. This has created a unique situation for the homeowner that needs a way out and especially so for those that still maintains a positive home equity. The lending institutions are also struggling with finding and keeping customers since if the home market is lousy and no one is buying then no one is taking out a loan. As a result they offer loans at insane rates just to entice people to get one. They have always loosened the methods of how you can get one – just read the fine print!
