THE BASICS OF MORTGAGE REFINANCING
What is Morgage Refinancing, Is It For Me, and What Will It Cost Me?
Mortgage refinancing refers to taking out another loan on your home. The second loan pays off the first one. Usually people do this if there is a drop in interest rates, to pay off other debts or unexpected emergencies such as high medical bills, or to change from a variable-rate loan to a fixed-rate loan.
All major banks offer mortgage refinancing, including Wells Fargo, Chase, Bank of America, etc. Most Mortgage companies will also handle mortgage refinance loans. Here are some of the top ones, you may recognize their names as lenders for home equity and first mortgages as well:
Lending Tree: Online loan marketplace connecting you to a network of lenders who compete for your business – mortgage loans, home equity loans, home equity line of credit, refinance mortgage, auto loan, student loan, small business loan, credit cards
E-Loan: leading provider of home mortgage refinancing products. Choose from fixed rate and ARM, pay option ARM, interest-only, and cash-out refinance. Low rates and great service.
Ditech: Refinance, First & Second mortgages, home equity loans; offers several fixed rate mortgage options for you to choose from.
Countrywide: Refinance, Home Equity, Countrywide, Full Spectrum Lending; apply online or through toll free number
Cal Pacific Lending:California Home Loan Specialists - Home Purchase Loans
HomeLoan Center: offers mortgage loans, home purchase loans, debt consolidation loans, home equity loans and bad credit loans all with the industry’s best customer service. Apply securely online or call toll free to speak with one of their mortgage experts
Lower My Bills: Refinance your mortgage with lenders you can trust. Receive up to 4 free quotes, compare rates and save money today. Bad credit OK.
Should I Refinance?
Only you can decide if refinancing is right for you. To assist you in making a decision, here are some points to consider:
1. Even a small reduction in interest will make a difference in payments.
2. If you are planning to stay in your home for at least 3-5 years, you should easily recoup the costs of the new loan within that time frame.
3. Realize that there will be extra costs to refinancing. If you can pay these costs (usually around $2,500) out of your pocket, the savings will show on your new mortgage. But if you're short of cash, it can be added to the new mortgage.
4. If your original mortgage was on a variable-rate interest plan, refinancing to a fixed rate mortgate makes sense with today's lower interest rates. This locks in your interest rate for the life of the mortgage, and there'll be no surprises later on should interest rates climb again.
5. If you can afford it, consider changing to a 15-year mortgage. This saves you a lot of interest over the life of your loan. The downside is that your tax-deductible interest payments will be lower, so your tax bill may be higher.
6. If the purpose of your loan is for debt consolidation or unexpected bills, consider a home equity loan instead. Do your homework to decide which will cost you the least amount of money.
What Are The Costs?
When you refinance your home, you pay off the original mortgage and sign a new loan. You'll find the costs for the new loan to be the same ones you paid for the old one: title search, appraisal, settlement costs, loan origination fees, and possibly a prepayment penalty on your old mortgage if this was written into the terms. This could run you between $1,000-$3,000, and even more if there is a prepayment penalty. If you have the money to pay these up front, your new loan will be less and you will save some money in interest. If you do not have the extra funds, these costs can be added to your new loan.
Refinancing your mortgage means to take out a new loan, paying off the old one when you do. Most people refinance to get a lower interest rate--along with lower monthly payments, to change from an variable-rate to a fixed-rate loan, or if they need money for any unexpected bills. If you are going to remain in your home for at least 3-5 years, your fees to make the new loan should be recouped by the lowered interest rate and payments. Only you can decide what's best for you. Study these facts and more before making the decision to refinance.
As there is a huge difference in the policy matters between travel insurance and mortage life insurance within a insurance company, you will find the same difference in the policy of loan on used car loan and new car loans by the various finance related institutions