Tips For Refinancing Your Home Mortgage
With mortgage loan rates at record lows its no surprise that mortgage refinancing is at a peak. Recently mortgage refinance applications hit the highest level in more than 5 years. While some may be able to turn this into huge savings, that is not true for every borrower. The last thing you want to do is get taken advantage of with a raw deal. There are several things you should know about the mortgage refinancing process before putting in an application.
If the mortgage interest rate is at least one percentage point lower than your current one, mortgage refinancing will likely work in your favor. It’s still important to analyze your financial position to be sure, but it’s worth considering under these circumstances. Also consider the fees associated with a mortgage refinance. The higher the fee, the more it will cut into any savings you get. You need to make sure the fees are low enough that you will earn that money back in a reasonable amount of time, usually a few years.
Be aware of the rejection rates for mortgage refinancing. Through the first months of 2008 only slightly more than half turned into loans. That means about half of the applicants took the time and money and ultimately stayed in the same position they were in before. The criteria for mortgage refinancing is getting stricter as the months go on so the number of rejected applications will likely only increase.
It has long been accepted that a great FICO score to have for refinancing is 720 but this is no longer true. Your credit score is everything when it comes to refinancing your home mortgage. Currently the lowest rates are available only to those with a 740 FICO or higher.
Know your options for paying fees. There are generally three ways to do this. If you have enough cash you can just pay the fees up front. More commonly accepting a higher interest rate will pay the mortgage refinance fees. Or you can tack the fees onto the principal of the home mortgage. Take to your home mortgage lender about which option will work best for you.
Because the lending standards are getting tougher by the day you may have to get used to being told no. However, even if one lender has told you no that doesn’t mean they all will. A home mortgage lender will not some and find you, you have to find them. Research the rates online, call the different lenders and find yourself the best mortgage rates.