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  • How refinancing in Ohio (OH) can save homeowners cash

    Ohio (OH) refinance products allow individuals to adjust their terms and as a result pay lower interest rates or monthly payments. Regardless of the state of the economy, a refinance mortgage can reduce the overall interest paid by individuals, while at the same time providing cash on hand to invest or finance pressing expenditures.


    Just like the rest of the nation, during the financial crisis 2008, Ohio’s housing market felt the ripple effect. At the lowest point of the housing crisis in Ohio – 2012 – the median home value was $106,000. As the economy recovered, so did Ohio’s housing market. Zillow estimates that by 2018 the median home value will increase to $129,000.


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    Interest rates in 2008 were also around 7 percent, nationally. As the housing market declined, so did interest rates. To date, rates are lower than the historic average, which puts many homeowners in Ohio in a perfect position to consider refinancing.


    Ohio refinance mortgage rates OH

    Many homeowners in Ohio are opting to refinance for lower monthly payments, less interest, or to take advantage of their home’s equity. (Photo/Wikipedia)

    How refinancing in Ohio works

    When a homeowner refinances a loan against their mortgage, they are essentially offering to sell their account to the highest bidder. A borrower’s bank can either adjust the terms of the loan and reduce the overall interest rates or other banks will gladly step in and buy out the account.

    Refinancing in Ohio operates on the premise that homeowners represent a minimal risk to lenders. Individuals can negotiate the absolute lowest interest payments possible, often opting for 30-year refinance rates that allow them minimal monthly payments over an extended period.

    Ohio refinance rates

    Ohio residents can expect to receive better interest rates on a refinanced mortgage than they would on a second mortgage because competition from other financial institutions drives the interest rates lower than a lender’s bank would ordinarily go.

    Refinancing companies take your credit rating, your state of residence, your desired loan terms and the amount of additional money you wish to borrow into consideration when calculating your refinanced mortgage rates.

    Special refinance interest rates can be secured in Ohio by individuals interested in taking out an FHA (Federal Housing Administration) loan that is used for the purpose of renovating the home against which the individuals are borrowing. FHA refinance loans are generally granted to medium – low-income families that qualify through the federal system.

    Additional refinance offers to consider

    Companies in Ohio offer fixed refinance mortgage terms that generally range from 15 to 30-year notes. The benefit of a fixed rate mortgage is that the rates you secure will be locked in as soon as an agreement is reached, for the life of your loan. Many homeowners refinance to a fixed rate mortgage to lower their interest rate, get away from their original adjustable rate mortgage (ARM), and lessen their payments.


    ARMS are another strategic refinance offering that can be useful to many homeowners. Refinancing with an ARM makes sense for homeowners who are nearing the end of their loan terms or plan to move out of their home soon. For a short, and fixed, period of time, the interest rate and cost for an ARM are typically lower than with a fixed rate mortgage. After the predetermined period of fixed interest has expired, rates are subject to the market value – which means they can rise quite a bit. This uncertainty for the future cost of an ARM makes it a smart short-term plan, but a less viable long-term solution.


    If you purchased your home when the market value was low, and now your home is worth more than you paid for it, you’re in a unique position for a home equity cash-out refi. A cash-out refi replaces your current mortgage, often at a lower interest rate. The borrower will refinance for more than the amount owed on their mortgage and the borrower takes the difference in cash.


    The interest rates associated with refinance loans of varying repayment terms are considered based on a point system. Points are scored based on the amount of borrowed money an individual is willing to pay off as soon as their loan contract is signed. The higher the points, the lower the interest rates will be but the borrower will consequently need to use a large portion of their borrowed sum to repay a portion of the loan immediately.

    Additional refinance charges to consider

    An Ohio refinance mortgage loan generally carries an upfront fee of approximately 2.5 – 3.0 percent of the total amount of money borrowed. In addition, closing costs are also associated with refinance mortgages.


    When determining which refinance product is best for you, remember to calculate these ancillary fees into your equation. It’s best to calculate the break-even point to ensure you’ll be living in your home long enough to reap the benefits of your refinance. To calculate the break-even point, consider the total amount of your refinance costs divided by the amount of monthly savings you’ll receive from your refinance. The sum of that equation is the number of months it will take you to break-even from the costs of your refinance.


    For example, if your refinance cost $2000, and you’re saving $300 each month from your new loan terms, your calculation would look like this: $2000/$300 = 6.66. It would take 6.6 months for you to break-even on your refinance.


    If closing costs are out of your budget, or the break-even point doesn’t work for you. many Ohio residents that qualify for an FHA refinance on their home can secure no cost loans, which do not include an extra closing fee.


    If you need professional guidance when determining the best option for your refinance, consider working with a mortgage broker. Brokers have the expertise to help pinpoint the proper strategy for you, as well as the connections in the industry to align your finance goals with a lender who can best meet your needs.


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