Mortgage Refinancing Tips - Find The Best Mortgage Loan

Doing your homework before mortgage refinancing will save you thousands of dollars and help you avoid common homeowner mistakes. Doing this homework means learning about the retail mortgage industry and comparison shopping for the best loan offer. Here are three tips to help you prepare for mortgage refinancing and find the best deal on your next mortgage loan.

I. Is Mortgage Refinancing Right For You?

If you are refinancing to lower your interest rate and save money, the longer you plan on staying in your home, the more it makes sense to refinance. There are expenses you will have to pay when mortgage refinancing and you will need time to recoup your expenses from any potential savings. There are other reasons for mortgage refinancing, even if you do not qualify for a lower interest rate than you currently have. If lowering your interest rate is not possible, you can get a lower monthly payment by choosing a different type of loan or extending the term length. Some homeowners choose mortgage refinancing as an alternative to costly home equity lines of credit or second mortgage loans when borrowing against their home.

II. Mortgage Refinancing - Choosing The Right Loan Type

There are a number of different loan types to choose from when mortgage refinancing. Fixed interest rates offer a degree of security but may not be the most affordable option when mortgage refinancing. Adjustable Rate Mortgages (ARM) typically come with significantly lower interest rates during an introductory period; if you understand what you're getting into with an Adjustable Rate Mortgage, you can save yourself a lot of money. Adjustable Rate Mortgages come in a variety of flavors including interest-only, hybrid, an option loans all with varying degrees of risk. It is important that you fully understand how the Adjustable Rate Mortgage works, when the lender adjusts the interest rate, and what caps are in place to protect you from excessive changes.

III. Mortgage Refinancing - Comparison Shop for the Best Mortgage Loan

Doing your homework before mortgage refinancing will save you thousands of dollars; when you research lenders it is important to understand how retail mortgage loanss work. Mortgages are products just like washing machines and the company you refinance with is simply reselling you a product from a wholesale mortgage lender. Mortgage companies and brokers routinely mark up the products they offer you in order to receive an additional commission from the wholesale lender. By learning how to recognize this retail markup you can avoid paying it.

When comparison shopping for the best loan offer, remember to compare all aspects of the mortgage refinancing loans you consider. Many homeowners get hung up on the best interest rate and overlook fees and closing costs. When you compare interest rates, origination fees, and closing costs you can be sure the mortgage you choose is the most competitive offer.

You can learn more about mortgage refinancing while avoiding costly homeowner mistakes by registering for a free mortgage guidebook.

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Posted in: Mortgage,Refinancing