Mortgage Refinancing Tips: Save Yourself Money and Headaches with Your New Mortgage Loan

Mortgage refinancing can be a stressful time for many families. You can head off potential problems and reduce your stress by doing your homework and researching mortgage lenders before you apply. Here are several tips to help save you money and future headaches when mortgage refinancing.

I. Check Your Credit First

Before applying for mortgage refinancing it is important to take stock of your credit history. Request copies of your credit reports from each of the three credit reporting agencies and carefully review your records for errors. It is important to request all there credit reports because the credit agencies to not share this information; if you only request an Equifax report you may never know about the mistakes in your Trans Union report that are damaging your credit score.

II. Get Your Mortgage Refinancing Guaranteed in Writing

Any negotiating you do with your loan representative is meaningless until you get it writing. This includes your interest rate guarantee, any points you will pay along with the terms you've negotiated with your loan representative. What terms should you concern yourself with when mortgage refinancing? Avoiding Yield Spread Premium needs to be your number one priority for the new mortgage loan. Yield Spread Premium is the retail markup of your mortgage rate by your mortgage company and paying that markup can result in thousands of dollars of unnecessary mortgage interest each year. How can you avoid Yield Spread Premium? Register for a free, six part video tutorial and you'll learn strategies for mortgage refinancing without this unnecessary markup of your interest rate.

III. Comparison Shop Using The Good Faith Estimate When Mortgage Refinancing

When shopping for the best mortgage refinancing offer, relying on the Annual Percentage Rate to choose the best loan does not give you enough information to make an informed decision. Requesting a copy of the Good Faith Estimate from each Mortgage Company or broker you consider allows you to perform a line-by-line comparison of all fees, terms, and mortgage rates.

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How Mortgage Refinancing Can Help You Save Money

If you are in the midst of paying off a mortgage loan, but there are other financial debts which are robbing you off your monthly income, then you need to think of mortgage refinancing. Mortgage refinancing can be a very effective tool that might help you secure better interest rates, increase the term of the loan, lower your monthly payments etc. In simple terms, you are looking at a second mortgage which will be a better deal than the original one. Your original loan will be paid off by the new loan and you will have a much lower rate of interest. But once again, you need to do your homework before you sign up for a mortgage refinancing loan. This small investment of time can reduce a lot of hassles for you later on.

Hunt For the Right Loan

You need to hunt around before you get a mortgage refinancing loan that is best suited for you. You will get different quotes and different interest rates. So you can compare the rates and choose the best one. You also need to research a bit on the current market rates. If the rates are higher or more or less similar to the current interest rates on your loan, then it is best if you wait for some time before you opt for refinancing. Ideally, you should wait until the interest rates in the market are 1 or 2% lower than your current interest rates.

Costs Involved and Cash

There are some costs involved in mortgage refinancing as well like any other loan program. You need to know about the costs involved in detail so that you do not get any unpleasant surprises later on. The costs are the origination fee and the closing costs. This amount might be as much as 2% to 3% of the actual loan amount. So you need to have some cash in hand before you opt for refinancing. Remember, the more cash you have in hand, the better your whole situation appears to the lender. So calculate these charges before you opt for refinancing.

The Good Faith Estimate

This is the most important tool that you request from the lender prior to selecting one. It will have the interest rates, the closing costs, lender fees, originating fees etc. Compare the good faith estimate from various lenders before you sign up for the mortgage refinancing loan. Do not opt for the loan program just on the basis of the lowest interest rates. Take other charges and expenses also into consideration.

Your Credit Ratings

Make sure that you request your credit reports from all three agencies and check it thoroughly. Even a small mistake in the credit reports can actually deny you the loan or make it a lot more difficult than it actually can be. So check this before hand itself.

Types of Interest Rates

If you are planning to stay in the house for a long time, then you might want to opt for a fixed price mortgage. This is the best option as it will not give you any surprises with monthly payments as the rate is fixed beforehand itself. If you opt for an adjustable rate mortgage, you might get a very low monthly payment one month, while it may be much higher in the next few months. So you need to select the right type of mortgage loan even while refinancing. Even if you are not satisfied with your current loan and you wish to switch to a different type of loan, then too you can opt for mortgage refinancing.

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Mortgage Refinancing: Save Money When Refinancing With Bad Credit

Mortgage refinancing with poor credit has become an easy task to complete; however, if you're not careful it's even easier to overpay for your new mortgage loan. Bad credit mortgage lenders are plentiful in today's market which is why proper comparison shopping is essential for homeowners with poor credit ratings. Here are several tips to help you find the best lender when mortgage refinancing with poor credit.

I. Bad Credit Mortgage Refinancing: Damage Control

The first thing you should do before you even think about a new mortgage is assess your credit. Credit records are maintained by three separate companies in the United States and you will undoubtedly have dozens of hands in your credit records throughout the course of a year. As a result, mistakes are common and your credit score suffers. Before you start shopping for a new mortgage request copies of your credit reports form each of the there credit agencies and carefully scrutinize them for errors. If you find mistakes in your credit files you will need to dispute the errors with each agency and the creditor responsible for placing it there. One the error is gone you will want to allow enough time for the correction to be reflected in your FICO score.

II. Bad Credit Mortgage Refinancing: Comparison Shop for the Best Loan

Depending on the severity of your credit problems you may have to seek mortgage refinancing from a type of specialty mortgage lender known as a "Sub-Prime" lender. Sub-Prime mortgage refinancing caters to homeowners that traditional mortgage lenders will not approve. You can expect to pay more because the lender is shouldering a greater risk when giving you a mortgage; however, if you do your homework and research lenders you can find interest rates comparable to what homeowners with good credit are paying. Enlisting the help of a Mortgage broker, provided you watch the broker like a hawk and do not pay retail markup, could help find you such a deal.

III. Bad Credit Mortgage Refinancing: Avoid Overpaying for the Loan

Before you start mortgage refinancing it is important to understand how the retail marketplace works. Mortgage companies and brokers are scoundrels, much like used car salesman, and receive the majority of their profit from overcharging you. Retail mortgage loans are commodity products just like cars. If you adopt a car buyer's mentality when refinancing your mortgage you will save yourself a lot of money. Retail mortgage companies and brokers represent wholesale mortgage lenders. When you qualify for a specific interest rate for your new mortgage, the wholesale sub-prime lender in this case, qualified you for a specific interest rate. Your mortgage company or broker marks up the interest rate to receive a commission from the wholesale lender. You are already paying that mortgage company or broker your origination fee, if you agree to pay retail markup you are in fact paying double for your mortgage.

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

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