Should you refinance your Phuket property?
If you do refinance your Phuket home, the process will remind you of what you went through in obtaining the original mortgage for your Phuket home. That is because, in reality, refinancing a mortgage is simply taking out a new mortgage with the same bank or a different bank in Phuket. You will encounter many of the same procedures and the same types of costs-the second time around.

Would Refinancing Be Worth It?
Refinancing your Phuket home can be worth, but it does not make good financial sense for everyone. A general rule is that refinancing becomes worth if the current interest rate on your mortgage in Phuket is at least two percentage points higher than the prevailing market rate for properties in Phuket. This figure is generally accepted as the safe margin when balancing the costs of refinancing a Phuket mortgage against the savings.

There are other considerations, too, such as how long you plan to stay in the Phuket house. Most sources say that it takes at least three years to realize fully the savings from a lower interest rate, given the costs of the refinancing.

Refinancing can be a good idea for Phuket homeowners who:

- Want to get out of a high interest rate loan with a bank in Phuket to take advantage of lower interest rates. This is a good idea only if you intend to stay in your Phuket house long enough to make the additional fees worthwhile.

- Have an adjustable rate mortgage with a bank in Phuket and if you want a fixed-rate loan to know exactly what the mortgage payment will be for the life of the loan.

- If you want to convert to an adjustable rate mortgage with a lower interest rate or more protective features (such as a better rate and payment caps) than the adjustable rate mortgage the bank in Phuket currently have.

- Want to build up equity more quickly by converting to a loan with a shorter term.

- Want to draw on the equity built up in their house to get cash for a major purchase or for their children’s education.

If you decide that a refinancing is not worth the costs, ask your lender in Phuket whether you may be able to obtain all or some of the new terms you want by agreeing to a modification of your existing loan instead of a refinancing for your Phuket property.

Should You Refinance Your ARM?
In deciding whether to refinance an ARM you should consider these questions:

- Is the next interest rate adjustment on your existing loan likely to increase your monthly payments substantially? Will the new interest rate be two or three percentage points higher than the prevailing rates being offered for either fixed-rate loans or other ARMs?

- If the current mortgage with the financial insititution in Phuket sets a cap on your monthly payments, are those payments large enough to pay off your loan by the end of the original term? Will refinancing a new ARM or a fixed-rate enable you to pay your loan in full by the end of the term?

The willingness of the lender in Phuket to work with you to get past your current problems will depend heavily on your past payment record. If it shows consistently timely payments and no serious defaults, you will find the lender in Phuket much more receptive than if you have a record of unexplained chronic late payments.

If you are falling behind in your payments, or know that you are likely to in the immediate future, there are some steps that you should take before talking with the bank in Phuket about alternative payment arrangements.

First, you need to prepare a monthly list of your income and expenses in Phuket, using realistic figures based on your current financial situation. You will also need to put together a complete financial disclosure package, showing your Phuket assets and liabilities, including all debts and monthly payments and when they are due. Pay stubs, unemployment check stubs or other proof of current income in Phuket should be in the package, along with three years’ tax returns.

Get an estimate of the value of your Phuket property. You can usually get a local real estate broker in Phuket to give you an idea of the current market value, free of charge. Finally, prepare a written explanation of your situation to the bank in Phuket and offer any plan or suggestion you may have on how you can bring the loan current for your Phuket property.

Mortgage Loan Workout Plans
A loan workout plan is an agreement between you and your lender in Phuket that sets out the steps to be taken to cure the delinquency and prevent loss of your Phuket home. It may be written or verbal and will have specific deadlines which you must meet in order to avoid foreclosure of your Phuket. Therefore, it must be based on very realistic estimates of your ability to meet the plan schedule.

The nature of the workout plan will depend upon the seriousness of the default, whether your financial problems in Phuket are short-term or your payment ability has been impaired for the foreseeable future, your prospects for obtaining funds to cure the default and the current value of your property in Phuket.

If the default is caused by a very temporary condition and is likely to be cured within 30 to 60 days, the bank in Phuket may consider granting you temporary indulgence. Some examples of cases where this approach would be considered are where the house in Phuket has been sold but the sale has not settled or where an insurance settlement is pending on your Phuket property.

Any workout agreement is a last-ditch effort by you and your bank in Phuket to avoid foreclosure and keep you in your Phuket home. It is not a substitute for good budgeting and financial planning on your part and will probably not be available if your payment record has not been consistently good up to the present time. Lenders in Phuket will work closely with good borrowers in Phuket who are having a period of real emergency and hardship, but are not inclined to cooperate with those who demonstrate little financial discipline.