Build Your Equity Faster By Refinancing

Build Your Equity Faster By Refinancing
There are a​ number of​ mortgages out there that give you​ low payments each month .​
Some of​ these mortgages,​ such as​ interest only,​ adjustable rate mortgages,​ and a​ few others,​ gave you​ the​ low payment up front - but it​ was at​ the​ expense of​ building up your equity .​
Here is​ how refinancing your mortgage can enable you​ to​ start building up your equity faster .​
Equity is​ the​ amount of​ cash you​ have available after you​ have lived in​ your home for some time .​
It is​ the​ difference between the​ current value of​ your home and the​ amount you​ still need to​ pay on​ your mortgage .​
Mortgages that allow you​ to​ make low payments up front,​ though,​ usually will use your cash to​ pay the​ interest - and it​ does not reduce the​ principal much – if​ at​ all .​
Your equity,​ however,​ can only be built up when you​ pay down the​ principal .​
This could leave you​ with a​ couple of​ options if​ you​ want to​ build up your equity quicker .​
The first option would be to​ put down a​ large chunk of​ cash at​ one time .​
Most of​ it​ would be applied to​ your principal .​
Most people,​ however,​ do not have the​ opportunity to​ do this .​
A second option would be to​ refinance your mortgage .​
If you​ watch the​ market and apply when the​ interest rates are down,​ you​ could save thousands of​ dollars .​
If,​ besides this,​ you​ shorten the​ repayment time by at​ least five years,​ you​ could save tens of​ thousands of​ dollars in​ interest .​
This results in​ more money going toward the​ principal each month.
A fixed rate mortgage would give you​ stable payments .​
You always know what they will be,​ and you​ can always confidently plan around it .​
You do not have to​ worry about what the​ economy is​ doing .​
Even better,​ though,​ is​ that a​ larger portion of​ your monthly payment goes toward your equity than most other types of​ mortgages .​
By getting a​ fixed rate mortgage,​ and reducing your time to​ pay off the​ mortgage,​ you​ can build up your equity even faster .​
Since you​ are considering refinancing,​ you​ may also want to​ tap into some of​ that equity - perhaps for home renovations .​
Some renovations,​ such as​ siding,​ remodeling a​ kitchen or​ bathroom,​ or​ adding a​ room onto the​ house,​ can also put a​ lot more value into your home – as​ soon as​ the​ project is​ finished .​
Obviously,​ this would also quickly raise the​ amount of​ equity you​ have,​ too .​
Be sure,​ though,​ that you​ check with your local Realtors or​ contractors in​ your area to​ find out which renovations actually add the​ most value - some renovations do not change the​ value much .​
Be sure to​ shop around some for the​ best deal .​
Lenders vary quite a​ bit in​ their prices and fees,​ as​ well as​ in​ their interest rates .​
Building your equity fast means not letting too much of​ your hard-earned cash go unnecessarily into the​ lenders pockets .​
When you​ refinance,​ stay away from mortgages that have penalties for paying off your mortgage early.
Build Your Equity Faster By Refinancing Build Your Equity Faster By Refinancing Reviewed by Henda Yesti on August 21, 2018 Rating: 5

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