NJ Loan Program: What is Cash-In Refinancing?

Most people, when they think about a refinancing NJ loan program, they think about the more conventional cash-out option. This particular NJ loan program allows you to take money out of your house. This was based on the fact that you had established equity in their home, or in other words, owed less on the mortgage than the house was worth. In this scenario, you could borrow a portion of this money and utilize the money for consolidating bills or making improvements to your home.

However, over the last year, more and more people are considering the cash-in refinancing NJ loan program. In fact, according to Freddie Mac, over one-quarter of all mortgages refinanced in the second quarter of 2011 were cash-in refinance NJ loan programs. This is not a new concept, but only has recently gained traction as cash-out refinancing has fell flat given the diminishing equity in many homes.

The cash-in refinance NJ loan program can sometimes be a uncomplicated solution for borrowers who’d like to refinance, but cannot because of declining property values, essentially leaving them owing more on their mortgage than the property is actual worth. So in order to get positive equity again, a homeowner may have to provide several thousands of dollars to refinance and take advantage of the lower interest rates. But there are a few things you need to consider for choosing the cash-in refinancing NJ loan program.

How Much Can You Save With This Type of NJ Loan Program?

This is easy to calculate. Most websites offer online mortgage calculators that you can plug in the new interest rate and mortgage term and then compare it your current mortgage. This way you can view how much you can save on overall interest – both monthly and over the life of the loan. It will also reveal what your new monthly mortgage payments will be.

Is Your Money from the Cash-In Refinance NJ Loan Program Better Served Elsewhere?

This is the “million-dollar” question. If you’re paying down your mortgage principle by $20,000-50,000 in order to refinance, that’s a whole lot of money. You’d have to ask yourself: what would the return on that kind of money be if you invested it somewhere else? Is it more than you could save over the life of the mortgage by refinancing? It is important to note, that reducing your mortgage interest by 1 – 2 percent is the same as earning a return of 1-2 percent on an investment.

Here’s an example to put this NJ loan program in perspective: Say you have a $200,000 mortgage balance and you put $40,000 into the cash-in refinance NJ loan program to reduce your interest rate by one percentage point. This would be the equivalent of earning one percent interest on the entire $200,000. In order to get that same rate of return on the $40,000 by itself – you’d need an investment option that consistently provided five percent interest.