Refinancing Your Home: Keep your head on!

I have a mortgage refinance story to share with you guys. One that involves a certain levelheadedness to show that refinancing CAN work, but you have to be cautious.

We lived in an area where we had purchased property about 7 years ago. Prices were in the toilet at the time, but soon they they went further down, down by 5% to 10%. We didn’t flinch we just kept paying our mortgage, and concentrated on other issues. Our house price dropped from NT$3.5 million to a little over NT$3 million.

Stupidly though we forgot to check interest rates, as they dropped. Our mortgage payments didn’t drop much at all. By then my wife and I thought it about time to buy a car. We had an opportunity to purchase a parking lot in our community as the investment company was getting rid of the stock, before being liquidated. Never occurred to me to ask why! We delayed purchasing the car for quite some time, though.

So we decided to jump: we renegotiated our house loan with the original financier. We increased the total amount to about NT$2.7 million from the total outstanding. That provided us with a check to purchase our parking lot (about NT$380K). In addition, we negotiated a new mortgage payment about 2/3 of what we had been paying before. It was a win-win deal.

Since then, we have noted that the property prices have increased here by about 50%-60% conservatively. So we benefited in a number of ways:
1. cheap property purchase
2. lower interest rate and lower monthly payments
3. increased property value
4. convenience of personal parking space

But, before you refinance, you need to make sure that you:
1. work to increase the potential return
2. take advantage of poor market
3. can handle the post refinance payments
4. your life is better as a result.

Season’s Greetings.

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