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Cleveland Ohio Refinance Loan - OH Mortgage Refi

 
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Cleveland Mortgage Refinance Loans - Reasons to Refi

The main reason that people refinance their mortgage in Cleveland, OH and every where else in the country is because they are trying to do one of the following: lower an interest rate, lower a payment, shorten a term, change loan programs, debt consolidation, or receive cash out.

Lowering the interest rate and/or mortgage payment

As long as there is a significant decrease in your rate and/or payment, it would benefit you to refinance into a lower rate. This makes sense in short term savings most of the time. You will want to do this if you need to save money now. If you are not having trouble making your payments and have no desire to save money monthly, you would not want to refi primarily for the interest rate and payment. However, you could get a lower rate and payment along with decreasing the term on your home loan.

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Shortening the term on your mortgage loan

If you are worried about going back to the same term you were in originally on your mortgage when you did the loan last time, you can just lower your term. If monthly payments are not a big issue, you can still lower your interest rate without going back to that original term. If you were in a 20-year fixed loan at 8% for 3 years and you wanted to lower that rate but not go back to a 20-year term, you could request that your term be shortened to 15 years. You may end up with a 6.5% interest rate on a 15-year mortgage. Your payment may or may not go down because you must remember that you just took 2 years of mortgage payments right away just like that. Shortening the term is a great strategy for those who are more concerned in paying the home off and less concerned with payment fluctuations. I have seen some people go from a being 7 years into a 30-year fixed rate loan and refinance to a lower rate on a 15-year fixed loan and cut 8 years off there home loan with a minimal increase in monthly payments! That is a whole lot of savings. You do the math.

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Changing your current mortgage loan program

This reason for refinancing is very easy to understand. A great example is that many people are in 2-year fixed ARMs and when the fixed rate starts to go variable after the 2 years is up, it is time to refinance and get back into something fixed. Hopefully credit is repaired, and they can be put into a good solid fixed loan. This means that the person changed from a 2-year fixed ARM loan program to a 30-year fixed loan program. This reasoning can go for any switching of loan programs.

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Consolidating debt into your mortgage

Credit card minimum payments are rising and this is becoming a great way for people to save money monthly. If you have equity in your home, you can refinance and wrap in other debt where payments might be too high. Installment loans, high interest credit cards, other revolving debt, and even automobiles can be wrapped into your monthly payment as long as you have enough equity. This will sometimes save a customer $500+ a month if done correctly. You do not need perfect credit to do these types of loans. Here is a great example of how this loan works.

Note: Current home loan balance is $100,000 with a payment of $735.70 at 8% on a 30-year fixed mortgage. The home is worth $150,000 so there is $50,000 of equity.

 

Dept
Balance
Monthly Payment
Car Note
$18000
$450
High Interest CC
$8900
$279
High Interest CC
$7500
$240
High Interest CC
$4500
$175
Installment Loan
$3000
$150
Gas Card
$1500
$80
 
$43,400
$1,374

After refinancing to a new 30-year fixed mortgage at 7.5% with a loan amount of $148,000, your new monthly payment would be $1036.97. Your payment has increased by $301.27, but you will not have $1,374 worth of other payments every month now. This is a grand total savings of $1,072.73 per month!!! Now you can also write all of this interest off on your taxes this year, where you could not do that on all the listed items above before.

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Cash-out refinances and home improvement refinances

This type of refi is pretty self explanatory. Instead of paying off debt when the loan closes, you can request cash in hand instead. You can do whatever you want with this money. Lots of times people take this cash out of their equity so they can do some work on the home. By putting money and work into your home, it will most likely raise the value of the property. Then you can look at it like a wash because you are using equity to do the work, but you are building equity when the value of the house goes up as the work is finished.

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