Sunday, September 23, 2012

When Does it Make Sense to Have your Mortgage Refinanced ...

When is it practical refinancing your mortgage? The answer to the question of whether refinancing a mortgage is best for you is not always as simple as yes or no. Just think about your real estate investment business real fast. Do you make quick conclusions without cautious considerations and answer with a yes or no anytime you purchase investment properties? For the benefit of your financial well-being, I have high hopes you don't.

The question does it make sense to refinance depends on a number of scenarios just like any other real estate transactions. And as with any real estate investing prospect, some of these loan refinancing scenarios are not very advisable. Quite a few deals involve a ?maybe but only if? answer and, of course, some options are absolute no-brainers.

I?ll give you my suggestions on how to deal with the concern of whether or not refinancing your mortgage is a good idea by taking a look at a few of these situations. To begin with, let?s look at debt. Should you follow conventional advice, refinance to a lower rate and then repay debts? This right here is a deal breaker to me. Do not do it. You're better off using other people?s money to get rid of your financial debt (i.e. your monthly earnings from tenants in your rental properties.)

Up next, to help cover rehabilitation or remodel costs, should you refinance a loan? I?m not going to label this as a deal breaker, although I lean pretty heavily towards a NO on this scenario. You should not have any problem purchasing realty investment properties well below market price in today?s market. This is why your final offer price should include these repair costs.

The only actual way refinancing receives a slight nudge closer to a yes is it if is the private residence you plan on residing on for many more years and you want to enhance your quality of life. It is, however, just a little nudge towards yes. Don't forget that, you really must take into account all the numbers and costs before you continue with the refinance.

Finally, would it be the better choice to refinance a loan if your intent is to reinvest in more cashflow properties? This specific is the one circumstance where I'd say yes to remortgage the loan. However - yes there is a catch - this scenario only makes sense in certain situations. Also, you need to do your homework much like any property investing deal.

The investment should pay you more than the cost of the refinance. Work the numbers and then run them again. Will this remortgage not cost you money and instead make you money? If that answer is a yes, then my answer is also a yes.

You must be wary of getting caught up in all the hype about low refinance rates. It doesn't seem sensible to refinance your loans nine out of ten times. You must be using that additional cash to obtain more cash flowing financial assets the one time it does be sensible to do so.

Source: http://www.realestatewebmasters.com/blogs/darwinfeldman/26413/show/

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