Home Loans
Do You have some Hard Questions about Mortgage Refinancing?
(presented by www.refinance-refinance.net - mortgage lenders)
By Robert Palmer
For many people, refinancing their mortgage is another way of saying ‘renewal’. Their bank or lender calls them up and says, “It’s time to renew your mortgage.” They have a short discussion on the phone, which results in the signing of new papers for another term, without too much thought.
For other people, refinancing is a necessity because they need some extra money for the house. They want to make use of some of the capital that has built up in their property. This means that they need to negotiate for a new mortgage - at a new loan amount.
And then again, it could be that your interest rate right now is too high, and you want to refinance to get that rate down. In a volatile interest rate market, it can be to your advantage to pay those penalty clauses and get yourself a better interest rate.
Refinancing at renewal
When your mortgage is due for renewal, it is an ideal time for you to shop around and really understand interest rates. It might be worth your while to move your mortgage to another lender - particularly if the competition is good and interest rates are lower elsewhere. While another company is competing for your business, they may also offer you other benefits you aren’t getting now - including paying any fees associated with moving your mortgage.
The long term costs of your mortgage are the result of the interest you pay over the life of the loan. The more you save in interest in the early part of your mortgage (when the amount owing is still high) the less it will cost you over time. If your mortgage is for a very small amount, or you will be mortgage free in 5 years or less, and you are saving less percent, you may not want to move your mortgage. The savings may not give you enough ‘pay back’. Be sure you know how much the fees are to move it, and compare that to what you will be saving. If the fees are more than you save ? stay back .
Refinancing For Extra Cash
With the cost of homes, it’s often better to buy what you can afford and remodel later! Once you are ready to remodel, particularly if you’ve lived in the house for a few years or have some equity built up, you may find that your best option is to refinance.
Most lenders are willing to discuss refinancing to get you some more money. What they are really doing is looking at the current value of your home versus the amount you have mortgaged, and they give you some cash back from the difference. This means that your mortgage gets bigger - and the cash difference comes to you.
Refinancing To Reduce Interest Rate
Consider the rates are dropping, but you’ve still got 3 years on your mortgage and you’re paying a couple percentage points more than the going rate, your best option is to approach your current lender and try to get an ‘early renewal’ on your mortgage.
Some lenders will charge a penalty for early renewal. You will have to determine if the cost of the penalty is less than the savings you will get with the new mortgage. If not - you’ll be best to wait.
Some lenders will renew early without penalty, but will give you a ‘blended rate’. What this means is you will have a ‘new’ mortgage, and you will be paying a rate that is a ‘blend’ of your existing interest rate and the new current interest rate. While it is a bit complex, based on the term picked for the ‘renewal’ and the time left on your current mortgage, the lender will ‘blend’ the two interest rates. So you will be paying a ‘blend’ of your existing rate and the new lower rate.
This is only a good deal if you have a fair amount of time left on your mortgage, and you are confident that interest rates won’t fall a lot further! If interest rates continue to go down, and you are now locked into a longer term at the blended rate, you may find that it wasn’t a good deal.
Refinancing For Credit Problems
Unfortunately, in this day of high consumer debt, more people than you’d like to think will find themselves with this problem.
Refinancing for credit or debt problems is not something that you should do without help. Lenders are likely to ‘punish’ the person who is in this situation with high interest rates, and other penalties and fees. Be sure to seek a reputable credit counselling organization, who can act as your advocate.
And take action sooner as opposed to later. Equally unfortunately, credit problems often get worse before they get better. A reputable credit counselling agency can help them get better much more quickly.
And you don’t want to lose your home.
–
Rich Sunset is an active mortgage professional in the New York Mortgage Business and has provided just the right loan to the right customer for the perfect fit
Webmaster at ArticleTrader.
===========================================
For additional Mortgage Refinancing information
and resources visit Mortgage Refinancing.
(http://www.refinance-refinance.net)
===========================================
Technorati Tags: mortgage refinance, refinance, home refinance, bad credit refinance, bad credit mortgage refinance, loan refinance, home loan mortgage refinance, mortgage refinance information, refinance mortgage, home equity loan, home equity loans, equity loans, debt consolidation, debt consolidation loans, debt consolidation loan, consolidation loans, credit card debt consolidation, credit card consolidation
