Things to Consider When Reinvesting Your Home
Most of the people don't know that take can change their loan to other investor; others are simply uninterested. They tend to be loyal with their very first lender but they don't know that such loyalty will bring higher interest rates. Because of increasing number of housing loans and amortization period, the interest can range from thousands to hundreds of thousands of money. The following factors may help you consider reinvesting your home.
Latest Interest Rate
When your current interest rate is higher than available housing loan packages on the market, it is time for you to consider reinvesting. Go back to your current bank or financial institution and ask them to reprice your loan package. Most likely, your lender will give you an offer, which is better than your current one. Try to compare this offer to the other packages and then decide if you should switch or not.
Lock-in and Clawback Time Periods
When you get a housing loan, there may be a lock-in period wherein your mortgage lender will charge you a penalty fee, maybe a percentage of your outstanding loan amount, if you were to fully repay your loan. Many housing loans have drawback period. This is when the lender will take back what they gave you when you get your housing loan. Lock-in period and clawback period are different from each other. Thus, it is not advisable for you to reinvest due to these extra costs.
Loan Quantum
The higher the amount of your loan, the greater your savings for the same decrease in interest rates will be. Yet fixed cost to reinvesting does not vary much with quantum loan. The difference between your latest and reinvesting interest rates has to be larger for a relatively smaller loan as fixed cost takes into a more significant part of your interest rate savings.
Distinguish Interest Rate Movements
Analyze how interest rates flow. Try a floating rate package as an alternative to fixed rate package if the interest rates are decreasing. Conversely, if you are on floating rates and believe interest rates are increasing, switching to fixed rates may be a good choice.
Own Financial Evaluation
If your financial state changed, consider reinvesting. Give some thought to take fixed rate package. Consider increasing your loan quantum. On the other hand, if your monthly income has increased and you want to lower interest payments, think of reducing your loan tenure. - 23159
Latest Interest Rate
When your current interest rate is higher than available housing loan packages on the market, it is time for you to consider reinvesting. Go back to your current bank or financial institution and ask them to reprice your loan package. Most likely, your lender will give you an offer, which is better than your current one. Try to compare this offer to the other packages and then decide if you should switch or not.
Lock-in and Clawback Time Periods
When you get a housing loan, there may be a lock-in period wherein your mortgage lender will charge you a penalty fee, maybe a percentage of your outstanding loan amount, if you were to fully repay your loan. Many housing loans have drawback period. This is when the lender will take back what they gave you when you get your housing loan. Lock-in period and clawback period are different from each other. Thus, it is not advisable for you to reinvest due to these extra costs.
Loan Quantum
The higher the amount of your loan, the greater your savings for the same decrease in interest rates will be. Yet fixed cost to reinvesting does not vary much with quantum loan. The difference between your latest and reinvesting interest rates has to be larger for a relatively smaller loan as fixed cost takes into a more significant part of your interest rate savings.
Distinguish Interest Rate Movements
Analyze how interest rates flow. Try a floating rate package as an alternative to fixed rate package if the interest rates are decreasing. Conversely, if you are on floating rates and believe interest rates are increasing, switching to fixed rates may be a good choice.
Own Financial Evaluation
If your financial state changed, consider reinvesting. Give some thought to take fixed rate package. Consider increasing your loan quantum. On the other hand, if your monthly income has increased and you want to lower interest payments, think of reducing your loan tenure. - 23159
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posted by X - Men @ 7:21 AM
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