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Recently, I successfully restructured my payments on my small business loan to save $500/month (which is a lot to me). It got me thinking, could/should I do that with my other loans? Even if I could save $100/month, that would be worth it. However, there’s a few concerns I would have about doing so:
From the interest rate on my current loan, it’s only 0.5% off the national average. By simply looking at that, it sounds like I’m better off waiting until the government floods the market with money to bring interest rates lower.
Another concern I would have is the fact that home values have continued to plummet. Granted, I bought it 1.5 years ago, so the market was already pretty down, but it has still continued to slide, obviously. As of now, I’m not paying PMI, because I got to former owner to give me 10% off the appraised price (in exchange for selling quickly) and I put the other 10% down OOP. If I were to refinance/restructure the loan, I would think that they would want to re-appraise the house on today’s FMVs, in order to get me to pay PMI (since I’m certainly no longer under 80% LTV), which would certainly negate any gains I would make on lowering the interest or restructuring the payments. Not to mention, I’m aware that the interest on the loan is deductible, but the PMI is not.
I thought I read somewhere that restructuring loans can hurt your credit? Is that true? With the business loan, that was certainly more than worth it, even if it did hurt my credit. However, with my home loan, while saving $100/month would be significant, I don’t know how much hurting my credit would be worth that amount.
I understand that mortgage lenders are restructuring loans with pro-active borrowers. Are vehicle financing lenders doing the same too? In this case, I’ve only had the loan for a year, so I don’t think that restructuring would allow me to save $100/month. Still, I thought I’d ask if anyone knew anything on the subject.
Thanks for your help.
From the interest rate on my current loan, it’s only 0.5% off the national average. By simply looking at that, it sounds like I’m better off waiting until the government floods the market with money to bring interest rates lower.
Another concern I would have is the fact that home values have continued to plummet. Granted, I bought it 1.5 years ago, so the market was already pretty down, but it has still continued to slide, obviously. As of now, I’m not paying PMI, because I got to former owner to give me 10% off the appraised price (in exchange for selling quickly) and I put the other 10% down OOP. If I were to refinance/restructure the loan, I would think that they would want to re-appraise the house on today’s FMVs, in order to get me to pay PMI (since I’m certainly no longer under 80% LTV), which would certainly negate any gains I would make on lowering the interest or restructuring the payments. Not to mention, I’m aware that the interest on the loan is deductible, but the PMI is not.
I thought I read somewhere that restructuring loans can hurt your credit? Is that true? With the business loan, that was certainly more than worth it, even if it did hurt my credit. However, with my home loan, while saving $100/month would be significant, I don’t know how much hurting my credit would be worth that amount.
I understand that mortgage lenders are restructuring loans with pro-active borrowers. Are vehicle financing lenders doing the same too? In this case, I’ve only had the loan for a year, so I don’t think that restructuring would allow me to save $100/month. Still, I thought I’d ask if anyone knew anything on the subject.
Thanks for your help.
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