by Kristelle Muldrock
Are you considering refinancing your Mortgage? If you do this correctly, this can be a fantastic way to save yourself a great deal of money. By spending a small amount of time on thorough research, as well as implementing a few beneficial tactics, you'll soon be on your way to get better rates or terms than you currently have on your mortgage loan. You will be rewarded with reducing your monthly repayments, reducing the length of your loan or potentially making available cash from the equity in your home.
Refinancing research may take a bit of time and effort, but the good news is that having discussions with a few mortgage lenders about your options and financial goals will cost you absolutely nothing. The benefits to increase your savings and cut down your costs could possibly save you thousands of dollars in the long run.
It is important to understand where you can benefit from refinancing before deciding to take action. If you can negotiate just half a percent interest reduction on your mortgage, this alone could save thousands. Here's an example:
Your Mortgage = $200,000 over 30 years
Interest = $290,000 @ 7.25%
New Rate = $267,000 @ 6.25%
Savings = $23,000 over 30 years
Your first step will be to gather several rate quotes from a range of mortgage lenders. You will need to supply basic information about your debt, income and assets so that they can offer the best mortgage loan package tailored to suit you. Below is a list of the information you should obtain from these lenders in regards to your new mortgage:
1. Length of the new loan 2. New monthly repayments 3. New Interest Rate Is there any prepayment penalty on your current mortgage 4. Extra fees for setting up the new loan 5. How much you will save over the term of your loan
Many mortgage lenders will be more than happy to do a full analysis of the new mortgage versus your existing mortgage.
Hunt around for the best packages, compare and evaluate Interest rates, closing costs, processing fees and extra charges. By having this knowledge of the lowest total costs available for refinancing, you gain an advantage to use leverage for negotiating the lowest rates and fees possible. Always ask loads of questions and be on the lookout for any hidden charges the lender may be inclined to bill you for, like loan review fees, etc. Always read the fine print.
Investigate other options such as a Loan Modification. If you don't want to change the term of your loan and are only looking for a lower interest rate, this can be a very quick and cost effective way to go. In a Loan Modification your current lender will agree to lower your interest rate for the remainder of the term of your loan. This can be a great alternative if your lender offers this facility and generally costs less than $500.
If you're having problems getting good interest rates from mortgage lenders, have a look at your credit rating. It is always easier to get a good deal if you have good or improved credit. It can be a lengthy process to improve your credit but may be worth the effort. Maintaining a good track record with prompt payments on your home, auto loans, insurance or utility bills, is a great way to improve your credit rating.
It is important to always proceed with caution, and before making any final decisions on refinancing your mortgage, always consult an expert.
Above all be entirely comfortable with your arrangements. Find a notable mortgage lender and this will help you find the best mortgage loan deal tailored for you, and at the same time giving you a personalized service from beginning to end.
