Posts Tagged ‘Refinance’
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.
Tags: Refinance
Is It Time To Refinance Your Home Mortgage
How do you know when it’s time to look into mortgage refinancing? When are the rates low enough to warrant the effort of a mortgage refinance? Once again there is no one set answer. If you are in dire straits, it may be worth checking into even if the mortgage interest rate is not the best. With the current financial market in the state it is, the mortgage interest rate is at lows we haven’t seen in many years. Making this a great time to ask about mortgage refinance rates.
There are several reasons to look into mortgage refinancing no matter the economic climate. The main reason to refinance is to lower your mortgage interest rate and reduce your monthly payments. This is a great reason and will reduce your overall costs. However, this won’t reduce the term of your home mortgage and can be a drawback. If you have an adjustable rate mortgage there is still the possibility at the mortgage interest rate will increase again. When or if it does, you will just have to refinance again.
You can also use mortgage refinancing to reduce the term of your loan. This can save you thousands of dollars in interest over the term of the loan. Overall, this can be a better option than just reducing your monthly payments. Reducing your payments is the best solution if you need immediate funds. Reducing the amount of time you have to pay can save you more money.
As a general rule you should only refinance if you can get a mortgage interest rate that is at least two percentage points lower than what you have currently. All situations are different however and this may not apply to you. Remember that because rates are so low, home mortgage lenders are being a lot stricter than a few years ago. Make sure you have all your information in order before approaching your lender. Check your credit to make sure it is still in good shape and that you’ve been making all your payments on time.
Also with the low mortgage rates most lenders are requiring more before they will consider a refinance. Most home mortgage lenders are requiring 20% equity before they will approve a mortgage refinance. If you have less than this, it will likely not be worth your time to get it approved. It is projected that in the next few quarters the mortgage interest rate will continue to fall and will likely stay steady for a while, so you do have some time. You have to look at the cost for mortgage refinancing as well. You have to pay the same costs and fees as when you first got the mortgage loan. It can take a bit to recoup those costs with your savings.
Certain circumstances will make mortgage refinancing the best case for you. Sometimes it will not. Ultimately only you can make the decision and hopefully the savings will start to add up.