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Ohio refinancing can build equity

Posted by  on Apr 16, 2009
 
There are good reasons for Ohio homeowners to refinance their home loans. If you have a high interest rate on your mortgage, refinancing could improve your financial situation. Many homeowners in Ohio and throughout America still have home loans with interest rates higher than 7.5 percent. More than 50 percent of Ohio homeowners who have refinanced still have interest rates higher than 8 percent on their home loans. This is good reason to shop for a better loan option.

The application process for a refinance loan is probably the biggest barrier for Ohio residents who are yet to take advantage of a lower interest rate. Shopping for the best rate, negotiating with lenders, filling out paperwork and other tasks can be a real hassle. Saving tens of thousands of dollars is worth the hassle, though, and there are professionals to help you with the process.

If you are trying to decide to whether to take advantage of lower interest rates with an Ohio refinance loan, you should simply crunch some numbers. You can figure out how much you could save and how your equity will grow with different interest rates. This should inspire you to stop procrastinating and start the refinance process immediately. If you measure the time it takes to shop for lenders and apply for a new home loan and the amount of money you save, you just might find earnings of $1,000 an hour for the effort.

A lack of awareness may also be keeping some Ohio homeowners from refinancing. Some people believe it’s only profitable to refinance if the new home loan is at least 2 percent lower than the current loan. This is not necessarily true. Lowering your interest rate by only 1 percent can potentially save you a lot of money.

Deciding to refinance should be for the right reasons, however. Refinancing should be seen as a way to build equity. If you’re only looking to lower your monthly home loan payments without considering the length of the new loan, you could end up spending a lot more money in the long run, so watch out for seemingly no-cost loans that put you back into a 30-year payment term. Saving money in the present could slow your equity build-up in the future. In order to build equity, try to get a refinance loan with a similar term to your current loan.

No-cash closings may also not be as good for your equity appreciation. Before locking into a loan agreement, find out what fees are involved. Most refinance home loans in Ohio have some sort of closing costs involved in order to finalize the deal. If you are offered a no-cost refinance loan, you may still pay these fees in the new mortgage balance. This may save you money in the initial costs, but you’ll still have to pay the fees eventually and with interest.

Just make sure to be aware of all your new home loan options, and calculate how they will affect your equity. You should be able to get information from the lenders you are working with, or you can use a mortgage calculator. You could find an Ohio refinance option that saves you lots of money for the future.

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