Building a dream house is not so easy. It involves great amount of commitment, struggle and more than important the finance to make this dream come true. Naturally, in that hurry to grab the opportune house, many don't calculate the Annual Percentage Rate (APR) of the loan taken up and just dream about their house in the hand. The same thing must have happened with you also. After some time, when your dream is fulfilled, you have the house in the hand and it is time for you to repay the amount, then you realise that you are paying too much in terms of interest than the original principal taken up for the loan.
In the past two turbulent years, the interest rates have been falling so tremendously that many house owners have lost the solace of acquiring a house. While many have gone in for foreclosure thinking that they are better off not having either the property or the loans, some have stuck to their dreams irrespective of the value the outside world bestows for them. It is always good to stick to your dreams and refinance home equity loan is one such way which makes it possible that you can stick to your dream in an easier manner.
Refinance home equity loan means taking up a new loan with a lower APR in comparison to the multiple loans which you owe to different lenders. Sticking to your dreams itself shows your commitment towards your life and as such your credit rating will naturally be positive. With such good credit rating, you will be naturally eligible for lower APR's thereby lowering the term and amount of repayment so that you can enjoy the lump sum cash for other requirements.
However, there may be times that your life requirements have pressed you so much that you may be forced to default a few instalments and as such your credit rating must have gone into the negative zone. Even in such a case, if you shop patiently, refinance home equity loan can be the right solution for your problems that you can enjoy lower instalments to one single lender and as there is no confusion of multiple bills, defaulting such payments is almost far from reality.
With improved repayment status, slowly your credit rating will also improve in the long run.
Now that the interest rates are at their least levels in pursuance to the Treasury bills which are estimated to be rising in the next 6 months, the APRs for refinancing would naturally be lower. The trick is to follow the auction rate chart of the T-bills. When the cycle in the chart is touching to its bottom, like that of now, you need to shop for multiple lenders before deciding for the best refinance home equity loan. You may think that why shop for multiple lenders when we need to take a single refinance home equity loan. Actually, no lender would offer you any benefit without dreaming of any advantage for him. When you meet multiple lenders, you become conversant with the types and terms of loans which the lenders are offering.
You need to note down every point which each lender is stressing upon. After returning to your house, if you make a situational analysis and go through the points noted down, you will understand the commitments of each and every lender. It may be that one lender may offer the loan at a.5% higher than the other lender. However, he may be an open minded person and may not charge you in any dubious way. He would lay down standard charges through which the calculation of APR would be quite easy. Even if such lender is a kilometer away from the other dubious lender, you can take the pain of traveling that extra distance once in a month with the confidence that the amount which you have mentioned in your cheque is ratified and you need not travel ten times for each payment.
Searching for a truthful lender doesn't mean that you agree to all his terms and conditions. You need to remember one thing that the refinance home equity loan is a mutually beneficial process and as such, you needn't kneel too much onto the lender's shoes. Just as you require a lender, the lender also needs committed borrowers that too in these turbulent times wherein defaulters are more in number than the repaying customers. You can always demand for lowering of charges to reduce your instalments.
The thumb rule in this matter is that your refinance home equity loan APR should be at least 2% lesser than the average APR's of your existing loans. In this way, your refinance home equity loan exercise would be successful. Once you complete that exercise, you can use that amount received towards redeeming your past loans with higher APR's, make further improvements to your dream house or even invest wisely if the interest received on such investments is sure to be higher than the APR's which you are repaying. If you are really conversant with the stock markets, investing in the equities at this time is also not a bad idea. But, one important thing one should remember is that money should never be kept idle. You should always use it for some constructive purpose or else the whole refinance home equity loans exercise would in itself be purposeless and waste.
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