Home Mortgage Refinancing Guide

When you refinance a mortgage you need to factor in the closing costs before agreeing to a loan. If you don’t take these costs into consideration you could lose money refinancing your mortgage. Shopping around will help you find lenders with lower fees; you should consider these fees along with the interest rate you will receive from a given lender.

The general rule of thumb is that it will take two years to recoup expenses before you will realize the savings from refinancing your mortgage. This rule is not set in stone; there are other factors to consider that could make refinancing a more attractive option. These reasons including getting better terms on your mortgage or trading out an adjustable rate mortgage (ARM) for a fixed interest rate. To decide if refinancing is worth your while you need to crunch some numbers. Tally your current interest payments for the rest of your mortgage loan. You will need to compare this with the fees and interest rate of your new mortgage. If you come out ahead then take the better interest rate.

It is very important to shop around for your mortgage loan because the fees you will pay vary a great deal from lender to lender. These fees could add up to thousands of dollars; a little legwork on your part will save you this money at closing time. Researching your mortgage on the Internet can save you thousands of dollars. Invest a little time and a few clicks and you will have quotes from a variety of direct lenders and brokers. There are a number of ways to refinance. You can consider an adjustable rate mortgage if you plan on staying in the property for a short time. You may also consider fixed-interest rate mortgages and hybrid mortgage loans. Consider changing the terms of your mortgage or pay more monthly to reduce your interest rate.

One other option to consider is cashing out your equity when you refinance. If you take a home equity line of credit you will not have closing costs like a regular mortgage. This line of credit will allow you to write checks on the equity in your home. Be sure and do your homework before refinancing your mortgage; this will save you thousands of dollars in the process. To learn more about refinancing your mortgage sign up for our free guide: “Five Things You Need to Know Before Refinancing Your Mortgage.”

If you are in need of refinancing your existing mortgage or taking out a second mortgage and are concerned that your credit score will prevent you from qualifying consider sub-prime options for your mortgage loan.

Mortgage lenders who offer sub-prime loans cater to people with bad credit. Traditional mortgage lenders specialize in low risk borrowers and mortgage products. These types of lenders will give you the best interest rates; however, they will not approve loans for individuals with poor credit ratings. Sub-prime mortgage loans are much easier to qualify for because the lenders will accept a higher amount of risk. You may be able to qualify for a 30 year fixed rate mortgage with little or no down payment; however you can expect to pay a premium for your interest rate. You will also have the option of an adjustable rate mortgage loan (ARM) which could get you a lower interest rate.

Because the lender is taking a greater risk by offering you a mortgage, these lenders will charge higher interest rates than traditional lenders. You might even be required to pay additional points up front and agree to more stringent terms. These terms could include early repayment penalties that could hinder your ability to refinance the mortgage loan.

Make sure you do your homework first and shop around before selecting a sub-prime lender. This will ensure you are getting the best deal available and keep you away from mortgage scam artists. The good news about selecting a sub-prime lender is that you will not be required to purchase private mortgage insurance (PMI). This insurance does nothing for the homeowner and can add hundreds of dollars to your monthly payment amount.

Before selecting a sub-prime lender discuss the fees involved with several brokers and lenders. Some lenders will charge a fee upfront. These fees you pay upfront do not guarantee you a good deal.

The home mortgage marketplace is extremely competitive; even with recent interest rate hikes you can still find an excellent deal if you are willing to invest a little time shopping for it. There are two approaches you can take when shopping for a mortgage loan. The first is to do the grunt work yourself. This approach will ultimately save you the most money and is the subject of our free guidebook. Before you can successfully take on this challenge you need to do your homework and learn a little about the mortgage industry. When you do this you will understand the language lenders and brokers use.

If you don’t have the time or even the interest to lean this you could rely on a mortgage broker to do the shopping for you. Keep in mind you will end up paying more to have this legwork done for you. Mortgage brokers are not banks or lenders. A broker functions to evaluate your circumstance and find a lender that matches you. Mortgage brokers have access to hundreds of lenders. The broker will contact wholesale mortgage lenders that could be a good match for you; in this competitive marketplace the lenders will compete for your mortgage.

Finding the maximum number of lenders to compete for your loan will save you a bundle of money. You will be able to compare loans, interest rates, and terms; this will allow you to make an informed decision on the right loan for your situation. Brokers can be an excellent choice for individuals with poor credit. They can help you secure mortgage loans from sub-prime lenders. Granted, these mortgage loans will cost you more initially; however you do have the option of refinancing once you’ve established equity in your home. Mortgage brokers are paid by commission. The rule of thumb when dealing with a broker is “buyers beware” and read the fine print. Don’t hesitate to shop around for mortgage brokers in the same way you would shop around for a mortgage loan.

To learn more about saving money on your mortgage sign up for our free guide to mortgages and mortgage refinancing.

When you find the perfect house you might not be able to find the perfect mortgage loan to go with it. Rather than let your dream home be sold to someone else you might be tempted to purchase with less than favorable terms on your mortgage. If you find yourself with a mortgage like this there are steps you can take to improve your situation. Refinancing is one option that could improve the terms of your mortgage and get you a better interest rate. RefiAdvisor.com offers information about finding the right loan to refinance your mortgage.

Before you dive into an important decision like refinancing a mortgage you need to learn the terminology and how the process works. Simply put, refinancing is taking out a new mortgage to pay off your old mortgage balance. The new mortgage payment and rate replace your old mortgage; you have brand new and more favorable terms for your mortgage loan.

How to Refinance Your Mortgage

This is a relatively simple task; however, it is easy to make costly mistakes if you haven’t done your homework first. To refinance your mortgage you need to shop around from a variety of banks, brokers, and other finance companies to find the best deal for your situation. The money you borrow from this lender will be used to pay your old mortgage loan; you’ll have a new mortgage loan and corresponding payments at your new rate of interest.

Under the terms of the new mortgage you’ll have a timeframe similar to the old mortgage to pay back the loan. Your goal for the new mortgage should be to find the lowest interest rate possible while maintaining acceptable terms. A lower interest rate will save you thousands of dollars over the term of the mortgage. There are a number of steps you can take save money on your mortgage. One step is prepaying points on the loan. Another is making bi-weekly payments.

To learn more sign up for our free course: “Five Things You Need to Know Before Refinancing Your Mortgage.”

Mortgage interest rates for a fixed 30 year mortgage rose to 6.31% this week; rates have not been this high since June of 2004. Averages for 15 year fixed interest rate mortgages are also up, averaging 5.85% this week. The fifteen year fixed interest rate was 5.69% last week and 5.08% this time last year.

This increase in mortgage interest rates has not cooled the red-hot housing market. Home sales dropped in September from a record pace; however, these sales are still setting historic records. Construction of new homes is still at record levels in spite of the rate hikes. One year adjustable rate mortgages (ARM) are 5.31% this week; this is up from 4.91% the week before. At this time last year the one year ARM was 4.0%.

Everyone likes to save money on their mortgage loan. Interest rates have been going up but are still at historic lows. If refinancing is not an option for you, there are other steps you can take to save money on your mortgage. Consider adjusting the frequency of your mortgage payments. Traditional mortgages have fixed payments once a month; if you make weekly or bi-weekly payments instead of once per month you will save yourself thousands of dollars in interest over the term of the loan. A simple Mortgage Calculator can demonstrate the principle of bi-weekly mortgage payments.

Purchasing a home is the largest investment many people make; owning your home outright provides you financial stability and well-being. Purchasing your home was a big investment. Take steps to maximize the return on your investment. There are many ways to save money when it comes to your mortgage, refinancing is only one of them. Educating yourself on these options will save you thousands of dollars over the life of your mortgage.