Facebook said Tuesday that its finance chief has left and that it is seeking a successor with "public company experience," a move that will feed speculation that the social networking titan is preparing for an IPO.
Gideon Yu, who had served as chief financial officer since 2007, departed for undisclosed reasons.
Co-founder Mark Zuckerberg has repeatedly said that an IPO was possible for the privately held Palo Alto company in the future, but always cautioned that such a move was not imminent.
In any case, investor appetite for initial public offerings has evaporated because of the depressed economy. Only one U.S. company went through with an IPO in the first quarter, according to Renaissance Capital, while many more are waiting for the climate to improve.
Yu had previously served at Yahoo as treasurer and at YouTube, helping negotiate the sale of the video site to Google in 2006. He had also briefly worked at Sequoia Capital as a venture capitalist.
Facebook's recruitment of Yu was part of a broader effort to bring experienced hands into the company, including former Google executive Sheryl Sandberg as chief operating officer. Relative old-timers at the 5-year-old company have been leaving over the past year, including co-founder and lead engineer Dustin Moskovitz; Adam d'Agelo, the chief technology officer; and Matt Cohler, an early executive.
Facebook has continued its phenomenal growth and is approaching 200 million users globally. Although it has struggled at times to capitalize on its user base through online advertising, it has made significant progress, according to a person familiar with the matter.
Facebook has turned in five consecutive quarters of profits, under the accounting formula of EBITDA, or earnings before interest, taxes, depreciation and amortization, according to the source. Revenue is expected to increase at least 70 percent in 2009; the company is expected to be cash flow positive in 2010.
Venture capitalists have poured money into Facebook in several rounds of funding. In 2007, Microsoft bought a 1.6 percent stake for $240 million, which valued the site at $15 billion.
Many investors now call that valuation excessively high.
E-mail Verne Kopytoff at vkopytoff@sfchronicle.com.
Tuesday, March 31, 2009
Monday, March 30, 2009
Government Tax Foreclosure Properties
Investing in government tax foreclosure properties may be a lucrative investment. When a property owner fails to pay federal or state taxes, the government can place a tax lien on the property. This lien supersedes all other types of liens on the property so if the property owner does not repay the lien, the property is auctioned off.
How Tax Foreclosure Happens
Government tax foreclosure can occur whenever a property owner does not pay property taxes or income taxes. The Internal Revenue Service may place a lien on a home after failure to pay tax debt. When this happens, all creditors receive notification by the government that the lien is in place. This motion gives the IRS the right to all property - including the land, buildings and even an individual's car - as well as all accounts receivable in a business situation.
The tax lien can be removed from the property if the property owner satisfies his taxes due, which often includes fees and interest, or the IRS accepts a bond submitted by the property owner agreeing to pay the debt. When this fails to happen, the property enters foreclosure. Within a period of six months the property is seized and sold, liquidating it to pay the required taxes owed by the owner.
A similar situation happens when the property owner does not pay property taxes. The county or other government collecting property taxes place the tax lien. When the tax debt remains unpaid, the property is sold at local auction to repay the owner's debts.
Throughout this process the property owner receives several opportunities to become current on not only their tax debt, but also their mortgage payments or other liens on the property. To avoid foreclosure, these debts must be paid prior to the court ruling to sell the property. That ruling usually takes place up to 30 days prior to the auction of the property.
[edit]
Investing in Government Tax Foreclosure Properties
Purchasing government tax foreclosed properties is an option for investors. These properties are not often sold through standard procedures, but are auctioned off at local sales. Investors should do their homework to learn as much as they can about the property before investing in it.
* Be notified of properties entering government foreclosure. Watch local newspapers and court reports for notifications of foreclosures in the area.
* Arrange to view the property prior to the auction. This may be possible if the property owners have moved out.
* Be prepared to make a sizable down payment on auction day. A minimum of 10 percent down is often required to be paid either in cashier's check or through a letter stating funding availability.
* Know the market value of the property. Some investors work with real estate agents or research online to learn the value of the property prior to the auction to ensure they do not pay too much for it.
* Do not be outbid. Many auctions result in several bidders. In some cases, individuals are not permitted at the auction themselves. Rather, their real estate agent must handle the negotiation for them. Ensure your real estate agent is a HUD approved agent to ensure this is possible.
[edit]
Tips for Government Foreclosure Purchases
There are plenty of options available for those who wish to invest in government tax foreclosure properties. In many cases, these properties are highly valuable since the property is well cared for by the previous owners. In other cases, the property is in a state of neglect. For those hoping to buy an affordable home, these properties can be an ideal investment.
The following are resources for locating government foreclosures available throughout the country. Local and state governments may offer their own website or may mail out auction notices to those registered to receive them.
* HUD: The U.S. Department of Housing and Urban Development offers guidance on purchasing HUD homes, or homes acquired by HUD due to foreclosure. Property listings are available at the website.
* ForeclosureDeals.com: Use the services at ForeclosureDeals.com to locate government foreclosures going to auction.
* RealtyTrac: RealtyTrac is one of the largest online resources for foreclosures, including government tax foreclosures. Search for available properties nationwide at the website.
Initial Author: Sandy Baker
Recent Contributors: Tamsen Butler
How Tax Foreclosure Happens
Government tax foreclosure can occur whenever a property owner does not pay property taxes or income taxes. The Internal Revenue Service may place a lien on a home after failure to pay tax debt. When this happens, all creditors receive notification by the government that the lien is in place. This motion gives the IRS the right to all property - including the land, buildings and even an individual's car - as well as all accounts receivable in a business situation.
The tax lien can be removed from the property if the property owner satisfies his taxes due, which often includes fees and interest, or the IRS accepts a bond submitted by the property owner agreeing to pay the debt. When this fails to happen, the property enters foreclosure. Within a period of six months the property is seized and sold, liquidating it to pay the required taxes owed by the owner.
A similar situation happens when the property owner does not pay property taxes. The county or other government collecting property taxes place the tax lien. When the tax debt remains unpaid, the property is sold at local auction to repay the owner's debts.
Throughout this process the property owner receives several opportunities to become current on not only their tax debt, but also their mortgage payments or other liens on the property. To avoid foreclosure, these debts must be paid prior to the court ruling to sell the property. That ruling usually takes place up to 30 days prior to the auction of the property.
[edit]
Investing in Government Tax Foreclosure Properties
Purchasing government tax foreclosed properties is an option for investors. These properties are not often sold through standard procedures, but are auctioned off at local sales. Investors should do their homework to learn as much as they can about the property before investing in it.
* Be notified of properties entering government foreclosure. Watch local newspapers and court reports for notifications of foreclosures in the area.
* Arrange to view the property prior to the auction. This may be possible if the property owners have moved out.
* Be prepared to make a sizable down payment on auction day. A minimum of 10 percent down is often required to be paid either in cashier's check or through a letter stating funding availability.
* Know the market value of the property. Some investors work with real estate agents or research online to learn the value of the property prior to the auction to ensure they do not pay too much for it.
* Do not be outbid. Many auctions result in several bidders. In some cases, individuals are not permitted at the auction themselves. Rather, their real estate agent must handle the negotiation for them. Ensure your real estate agent is a HUD approved agent to ensure this is possible.
[edit]
Tips for Government Foreclosure Purchases
There are plenty of options available for those who wish to invest in government tax foreclosure properties. In many cases, these properties are highly valuable since the property is well cared for by the previous owners. In other cases, the property is in a state of neglect. For those hoping to buy an affordable home, these properties can be an ideal investment.
The following are resources for locating government foreclosures available throughout the country. Local and state governments may offer their own website or may mail out auction notices to those registered to receive them.
* HUD: The U.S. Department of Housing and Urban Development offers guidance on purchasing HUD homes, or homes acquired by HUD due to foreclosure. Property listings are available at the website.
* ForeclosureDeals.com: Use the services at ForeclosureDeals.com to locate government foreclosures going to auction.
* RealtyTrac: RealtyTrac is one of the largest online resources for foreclosures, including government tax foreclosures. Search for available properties nationwide at the website.
Initial Author: Sandy Baker
Recent Contributors: Tamsen Butler
Sunday, March 29, 2009
Getting the Best Mortgage Rates
Making sure that you get the best rates available is extremely important when taking out a home loan. The amount of money that you pay in interest can significantly impact the total amount of money that you pay over the life of your loan. Because homes are meant to be an investment as well as a place to live, it is important that you pay as little as possible to reap the full benefit of ownership.
However, getting the best mortgage rates isn't easy. You will need to have a good credit history to qualify for prime rates. A down payment, verifiable income, and a steady job are also contributing factors.
But qualifying is only half the battle. Mortgage rates can vary dramatically from lender to lender. You will need to shop around of you want the best deal.
The steps below will guide you through the entire process and provide you with the tips you need to secure a fair mortgage rate.
Step One: Your Credit
By law, you are entitled to one free credit report each year. It is very important that you take advantage of that right and pull your credit report before applying for a loan.
To get your report, go to the central site that has been established by the three credit reporting bureaus: Annual Credit Report.com. Here, you will be able to get instant access to your credit report at no charge. If you don't want to use the online form, you can also request your report by phone or by mail:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
1-877-322-8228
Once you have a copy of your report, look it over carefully for mistakes or negative information. If there are any blemishes that may be dragging down your credit score, do your best to get them fixed immediately. The better your credit score is, the better your chances are of qualifying for the best mortgage rates.
Step Two: Your Finances
f you are interested in applying for a mortgage loan, you will need to prove to mortgage lenders that your finances are in good order.
To start, you will need more money coming in than going out. Lenders will take a good hard look at your debt-to-income ratio and they will need to see that you can afford to take on the expense of a mortgage loan.
Having verifiable income and money in your savings account is also important. Lenders will want to see that you have the money for a down payment, or at minimum, money for closing costs. If you need to get together funds quickly, consider having a garage sale, picking up a second job, or selling a few items on Ebay.
Step Three: Finding a Lender
Though the first two steps are essential if you want to get the best mortgage rates, the last step is of almost equal importance. The lender you choose will determine how high or how low your [Mortgage Loan Rate | interest rates] are.
If you want to find just the right lender, you will need to shop around. Ask friends and family for a reference, speak to your local bank, and go online. Get quotes from at least three different lending institutions prior to making any decisions.
The mortgage process can be very exciting, and while it can be tempting to accept the first approval that comes your way, it will not help you get the best mortgage rates. Take your time and be smart. Your home purchase may be one of the biggest investments you ever make.
Initial Author: KarenS
However, getting the best mortgage rates isn't easy. You will need to have a good credit history to qualify for prime rates. A down payment, verifiable income, and a steady job are also contributing factors.
But qualifying is only half the battle. Mortgage rates can vary dramatically from lender to lender. You will need to shop around of you want the best deal.
The steps below will guide you through the entire process and provide you with the tips you need to secure a fair mortgage rate.
Step One: Your Credit
By law, you are entitled to one free credit report each year. It is very important that you take advantage of that right and pull your credit report before applying for a loan.
To get your report, go to the central site that has been established by the three credit reporting bureaus: Annual Credit Report.com. Here, you will be able to get instant access to your credit report at no charge. If you don't want to use the online form, you can also request your report by phone or by mail:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
1-877-322-8228
Once you have a copy of your report, look it over carefully for mistakes or negative information. If there are any blemishes that may be dragging down your credit score, do your best to get them fixed immediately. The better your credit score is, the better your chances are of qualifying for the best mortgage rates.
Step Two: Your Finances
f you are interested in applying for a mortgage loan, you will need to prove to mortgage lenders that your finances are in good order.
To start, you will need more money coming in than going out. Lenders will take a good hard look at your debt-to-income ratio and they will need to see that you can afford to take on the expense of a mortgage loan.
Having verifiable income and money in your savings account is also important. Lenders will want to see that you have the money for a down payment, or at minimum, money for closing costs. If you need to get together funds quickly, consider having a garage sale, picking up a second job, or selling a few items on Ebay.
Step Three: Finding a Lender
Though the first two steps are essential if you want to get the best mortgage rates, the last step is of almost equal importance. The lender you choose will determine how high or how low your [Mortgage Loan Rate | interest rates] are.
If you want to find just the right lender, you will need to shop around. Ask friends and family for a reference, speak to your local bank, and go online. Get quotes from at least three different lending institutions prior to making any decisions.
The mortgage process can be very exciting, and while it can be tempting to accept the first approval that comes your way, it will not help you get the best mortgage rates. Take your time and be smart. Your home purchase may be one of the biggest investments you ever make.
Initial Author: KarenS
Thursday, March 26, 2009
Mortgage
Learn the Basics About Mortgages
The first step to a suitable mortgage is to learn about different Types of Mortgages. Many lenders willingly provide this basic information, but the best option often depends on the current Mortgage Interest Rates. Adjustable Rate Mortgages, for example, may be a good option when interest rates have the chance of falling, resulting in lower payments and substantial savings. When those same interest rates are increasing, however, home buyers may find themselves faced with overwhelming Mortgage Payments that could lead to repossession or foreclosure. Most lenders are happy to provide Mortgage Quotes, but they may require fees or written commitments, something that savvy buyers strive to avoid when comparing different lenders. It may be wise to also investigate Mortgage Insurance to protect the significant investment about to be made, and depending on the potential down payment, such insurance may be required.
By learning the basics about mortgages before first approaching a home builder, lender, or realtor, buyers will not be misled by industry jargon and cleverly-phrased contracts or agreements. Once having mastered the definitions of mortgages and their assorted components, buyers are ready to move on in the home buying process.
When It’s Not Your First Mortgage
Even if it’s not your first mortgage, it is important to refresh your knowledge before approaching lenders. Mortgage Interest Rates change according to the health of the economy and new policies may be available that you are unfamiliar with. Commercial Mortgages differ significantly than residential or personal property mortgages if you are looking to invest in a business, and depending on your credit, you may need to investigate Bad Credit Mortgages as well. Home Equity Mortgage Loans are available to help individuals consolidate debt or procure a large lump sum for significant expenses such as a new vehicle, educational expenses, unexpected medical fees, or other charges, giving home owners substantial financial power even if they have not paid off a first mortgage yet.
Your Mortgage for You
The key to finding the right mortgage is finding one that works for you. Every home owner’s individual circumstances vary, and the type of mortgage, interest rate, or lender that works for your friend, neighbor, co-worker or sibling may not be the best choice for your financial needs. By carefully investigating how loans work and what the differences are between Types of Mortgages and Mortgage Lenders, you can choose the option that best fits your financial situation and future plans without jeopardizing your credit, your home, or your sanity.
The first step to a suitable mortgage is to learn about different Types of Mortgages. Many lenders willingly provide this basic information, but the best option often depends on the current Mortgage Interest Rates. Adjustable Rate Mortgages, for example, may be a good option when interest rates have the chance of falling, resulting in lower payments and substantial savings. When those same interest rates are increasing, however, home buyers may find themselves faced with overwhelming Mortgage Payments that could lead to repossession or foreclosure. Most lenders are happy to provide Mortgage Quotes, but they may require fees or written commitments, something that savvy buyers strive to avoid when comparing different lenders. It may be wise to also investigate Mortgage Insurance to protect the significant investment about to be made, and depending on the potential down payment, such insurance may be required.
By learning the basics about mortgages before first approaching a home builder, lender, or realtor, buyers will not be misled by industry jargon and cleverly-phrased contracts or agreements. Once having mastered the definitions of mortgages and their assorted components, buyers are ready to move on in the home buying process.
When It’s Not Your First Mortgage
Even if it’s not your first mortgage, it is important to refresh your knowledge before approaching lenders. Mortgage Interest Rates change according to the health of the economy and new policies may be available that you are unfamiliar with. Commercial Mortgages differ significantly than residential or personal property mortgages if you are looking to invest in a business, and depending on your credit, you may need to investigate Bad Credit Mortgages as well. Home Equity Mortgage Loans are available to help individuals consolidate debt or procure a large lump sum for significant expenses such as a new vehicle, educational expenses, unexpected medical fees, or other charges, giving home owners substantial financial power even if they have not paid off a first mortgage yet.
Your Mortgage for You
The key to finding the right mortgage is finding one that works for you. Every home owner’s individual circumstances vary, and the type of mortgage, interest rate, or lender that works for your friend, neighbor, co-worker or sibling may not be the best choice for your financial needs. By carefully investigating how loans work and what the differences are between Types of Mortgages and Mortgage Lenders, you can choose the option that best fits your financial situation and future plans without jeopardizing your credit, your home, or your sanity.
Adjustable Rate Mortgage Interest Only Bad Credit
ype "adjustable rate mortgage interest only bad credit" into any search engine and you will be bombarded with plenty of lenders willing to take a look at your loan application. Before leaping onto the interest only ARM bandwagon, however, you should first consider if this mortgage product is really the best fit for your needs.
Bad Credit and Mortgages
If you have several dings on your credit then you can safely assume that you will pay a higher interest rate and more fees for a mortgage loan. This is because you are a higher risk to lenders, based on your credit history. Factors on your credit report which make you a high credit risk include:
* Late payments
* Overextended credit lines
* Excessive credit accounts in relation to your income
If you aren't sure what the status of your credit score is then you should pull a copy of your credit report before your apply for a mortgage loan. It may turn out that you have better credit than you thought…or you may have such bad credit that you may decide to rent a while longer while you diligently work to improve your credit score. You can check your credit score at one of the three major credit bureaus:
You should never apply for a mortgage loan without first checking your credit report to make sure everything listed is accurate. Errors can transform an average credit report into a bad credit report.
Adjustable Rate Mortgages
Adjustable rate mortgages can be tricky because you are really taking a gamble with which way interest rates will go after you secure the mortgage. Although some mortgage experts herald ARMs as a fantastic way for people to obtain larger loans than they would qualify for with a fixed rate mortgage, you need to take into consideration the fact that your monthly payment can increase exponentially after the initial fixed rate period. If you aren't ready to pay a substantially higher amount monthly for your mortgage payment then a significant increase can throw you into financial peril.
Of course a smaller monthly payment is always possible if interest rates fall, and this would be a welcome surprise for borrowers
Interest Only Mortgages
An interest only mortgage involves payments going toward the interest on the loan and not the principal balance, which effectively means that even though you make payments each month you never touch the actual balance that you owe on your home. If you buy a house for $150,000 and for five years only pay interest, then you still owe $150,000 unless you make additional payments toward principal.
Why do people apply for interest only mortgages? Paying only interest allows you to pay substantially less per month than you would if your payments were being applied to both interest and principal. Although this system may work for borrowers who will diligently apply extra payments toward the principal balance, it is not generally suggested as a long-term loan because the time will come when the amortization expires and you still owe a considerable sum.
Combine Adjustable Rate Mortgage Interest Only Bad Credit
When you combine all of the factors, you're looking at a risky mortgage loan. Here is why:
1. Bad credit loans have higher interest rates and higher fees.
2. Adjustable rate mortgages have the potential to have higher monthly payments later in the life of the loan.
3. Interest only mortgages can have higher fees, and payments don't go toward principal unless you make extra payments.
Although it isn't realistic for some potential applicants, a much better idea is to:
* Take the time to fix your credit before applying for a mortgage loan, because this will result in lower interest rates and less fees.
* Apply for a fixed rate mortgage with the shortest amortization you can afford, because this will avoid any rude surprises from sudden interest rate increases.
* Choose a mortgage loan which allows you to pay toward principal with each payment, and make an effort to make additional principal payments when possible.
Not everyone is in the position to be able to secure an ideal mortgage loan, but regardless of your credit history you should still take the time to find the best mortgage loan possible.
Bad Credit and Mortgages
If you have several dings on your credit then you can safely assume that you will pay a higher interest rate and more fees for a mortgage loan. This is because you are a higher risk to lenders, based on your credit history. Factors on your credit report which make you a high credit risk include:
* Late payments
* Overextended credit lines
* Excessive credit accounts in relation to your income
If you aren't sure what the status of your credit score is then you should pull a copy of your credit report before your apply for a mortgage loan. It may turn out that you have better credit than you thought…or you may have such bad credit that you may decide to rent a while longer while you diligently work to improve your credit score. You can check your credit score at one of the three major credit bureaus:
You should never apply for a mortgage loan without first checking your credit report to make sure everything listed is accurate. Errors can transform an average credit report into a bad credit report.
Adjustable Rate Mortgages
Adjustable rate mortgages can be tricky because you are really taking a gamble with which way interest rates will go after you secure the mortgage. Although some mortgage experts herald ARMs as a fantastic way for people to obtain larger loans than they would qualify for with a fixed rate mortgage, you need to take into consideration the fact that your monthly payment can increase exponentially after the initial fixed rate period. If you aren't ready to pay a substantially higher amount monthly for your mortgage payment then a significant increase can throw you into financial peril.
Of course a smaller monthly payment is always possible if interest rates fall, and this would be a welcome surprise for borrowers
Interest Only Mortgages
An interest only mortgage involves payments going toward the interest on the loan and not the principal balance, which effectively means that even though you make payments each month you never touch the actual balance that you owe on your home. If you buy a house for $150,000 and for five years only pay interest, then you still owe $150,000 unless you make additional payments toward principal.
Why do people apply for interest only mortgages? Paying only interest allows you to pay substantially less per month than you would if your payments were being applied to both interest and principal. Although this system may work for borrowers who will diligently apply extra payments toward the principal balance, it is not generally suggested as a long-term loan because the time will come when the amortization expires and you still owe a considerable sum.
Combine Adjustable Rate Mortgage Interest Only Bad Credit
When you combine all of the factors, you're looking at a risky mortgage loan. Here is why:
1. Bad credit loans have higher interest rates and higher fees.
2. Adjustable rate mortgages have the potential to have higher monthly payments later in the life of the loan.
3. Interest only mortgages can have higher fees, and payments don't go toward principal unless you make extra payments.
Although it isn't realistic for some potential applicants, a much better idea is to:
* Take the time to fix your credit before applying for a mortgage loan, because this will result in lower interest rates and less fees.
* Apply for a fixed rate mortgage with the shortest amortization you can afford, because this will avoid any rude surprises from sudden interest rate increases.
* Choose a mortgage loan which allows you to pay toward principal with each payment, and make an effort to make additional principal payments when possible.
Not everyone is in the position to be able to secure an ideal mortgage loan, but regardless of your credit history you should still take the time to find the best mortgage loan possible.
Mortgage Refinancing "an Introduction"
Life is about trading up. Climbing the corporate ladder, upgrading out of that clunker you drove in college, and moving out on your own-all these involve trading in one situation for a better one. You can trade-up mortgages, too.
A mortgage refinance is the process of taking out a new loan, and using the proceeds to pay off your old one. Generally, you'd do this to make a change in the structure of your debt in order to get more money, a lower monthly payment, or a shorter pay-off schedule.
Why refinance?
You'd trade-up your mortgage for the same reason that you'd trade-up your job, car, or living arrangement-because circumstances change. What you need out of a mortgage today may be different from what you needed five years ago. Refinancing can achieve one or more of the following objectives:
1. Lower your monthly payment. You can reduce your monthly payment by refinancing to a lower interest rate. Have market rates dropped since your old mortgage was funded? Has your credit improved? Has your home increased in value? Any one of these happenings could mean that you'd qualify for a lower rate.
2. Shorten your pay-off term. Paying off your mortgage loan in 15 years rather than in 25 can save you tens of thousands of dollars in interest over the life of the loan. If you can afford the higher monthly payment and plan to stay in the home indefinitely, it's well worth it.
3. Optimize your loan structure. Your current loan structure may no longer be suitable for you in the future. Maybe you bought your home with an adjustable-rate mortgage (ARM) and your initial fixed-interest period is about to expire. Perhaps you have a fixed-rate mortgage, but you'd like to take advantage of the more flexible option ARM. Discuss your objectives with your lender to determine the most appropriate loan structure for you.
4. Consolidate your debt. If you're carrying a lot of credit card debt, you can lower your monthly repayments through consolidation. To do this, you'd take out a mortgage loan large enough to pay off all the debts on your cards plus the balance on your old mortgage.
5. Fund large, one-time expenses. You can raise the funds you need by doing what's called a cash-out refinance, where you'd take out a loan that's larger than your current one. As soon as you pay off the old loan, the excess funds can be used to pay for home improvement projects, college tuition, your daughter's wedding, long-term care expenses, etc.
Essentially, your mortgage is a financial tool that might need occasional sharpening. As life throws you new circumstances, trading up that mortgage may be one way to manage change.
A mortgage refinance is the process of taking out a new loan, and using the proceeds to pay off your old one. Generally, you'd do this to make a change in the structure of your debt in order to get more money, a lower monthly payment, or a shorter pay-off schedule.
Why refinance?
You'd trade-up your mortgage for the same reason that you'd trade-up your job, car, or living arrangement-because circumstances change. What you need out of a mortgage today may be different from what you needed five years ago. Refinancing can achieve one or more of the following objectives:
1. Lower your monthly payment. You can reduce your monthly payment by refinancing to a lower interest rate. Have market rates dropped since your old mortgage was funded? Has your credit improved? Has your home increased in value? Any one of these happenings could mean that you'd qualify for a lower rate.
2. Shorten your pay-off term. Paying off your mortgage loan in 15 years rather than in 25 can save you tens of thousands of dollars in interest over the life of the loan. If you can afford the higher monthly payment and plan to stay in the home indefinitely, it's well worth it.
3. Optimize your loan structure. Your current loan structure may no longer be suitable for you in the future. Maybe you bought your home with an adjustable-rate mortgage (ARM) and your initial fixed-interest period is about to expire. Perhaps you have a fixed-rate mortgage, but you'd like to take advantage of the more flexible option ARM. Discuss your objectives with your lender to determine the most appropriate loan structure for you.
4. Consolidate your debt. If you're carrying a lot of credit card debt, you can lower your monthly repayments through consolidation. To do this, you'd take out a mortgage loan large enough to pay off all the debts on your cards plus the balance on your old mortgage.
5. Fund large, one-time expenses. You can raise the funds you need by doing what's called a cash-out refinance, where you'd take out a loan that's larger than your current one. As soon as you pay off the old loan, the excess funds can be used to pay for home improvement projects, college tuition, your daughter's wedding, long-term care expenses, etc.
Essentially, your mortgage is a financial tool that might need occasional sharpening. As life throws you new circumstances, trading up that mortgage may be one way to manage change.
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