When considering refinancing your home there are a number of important questions homeowners need to answer. Why refinance a home loan? Is this a good time to refinance? Where should you go to refinance your home loan?
Why refinance a home loan? If your able to make your current mortgage payment with little struggle there may be no reason to refinance. If you have other obligations you are struggling to meet lowering your mortgage payment by $100 or more a month may free up needed funds.
Is this a good time to refinance? Timing when refinancing is half the battle. If rates offered are well below the rates you are currently paying you would do well to consider refinancing.
Where should you go to refinance your home loan? As a rule it is usually best to contact your current lender for a mortgage rate quote. Likely you will be quoted a rate that is less than competitive when compare to rate quotes offered by online lending marketplaces who are competing for your business. Therefore is it best to get quotes from these marketplaces in writing and ask your current lender to meet or beat the lowest of the quotes.
Before filling out the online rate quote forms or contacting your current lender you’ll need to determine the real purpose of the loan. Answer the following questions to determine the purpose of refinancing your home loan.
1. Are you seeking to lower your monthly payments?
2. Do you want to consolidate debt?
3. Need cash for large purchases?
4. Are you seeking to adjust your interest deduction expense for tax purposes?
Having established the purpose for refinancing consider how much loan you truly can afford and the amount you wish to save when refinancing your home. If cash is needed for major purchases or investment determine the minimum amount that will accomplish your purpose vs how much you wish to save when refinancing.
Cash-Out Refinance Loan Programs
Lenders are currently offering several loan programs to fit the need for lower rates and cash for major purposes. A cash-out refinance loan provides you with both options in one loan. Compare rates along with interest, tax and insurance to help you determine the total amount of interest paid when paying off the loan.
Home Mortgage Rates
Even if rates are less than 1% you may still see a significant savings when refinancing. For example, the monthly payment (excluding taxes & insurance) on a $100,000 loan at 8.0% would be $ 733.76. If the rate were lowered to 7.1%, the monthly payment would be about 672.03. An annual savings of $732. Using the loan payment calculator at http://www.bcpl.net/~ibcnet/mortgage-calculator.html.
Shopping For Bargain Rates
Definitely contact multiple lending institutions for competitive home mortgage loan refinancing rates. A good place to start is with your current lender/mortgage company. Get a written rate quote and then compare them to the quotes from other lending marketplaces. These marketplaces feature a rate quote form that can be submitted to up to four lenders at a time.
Once you've filled out the form and submit it lenders will begin calling you offering you a competitive loan rate quote. When speaking to each lender remember to ask them to provide a couple of refinancing scenarios showing how your loan term length, monthly payment and your total interest expense on the loan will change.
Determine Feasibility
After looking at these scenarios, determine whether or not you should spend the money to refinance. If you determine that it is still feasible to get a loan go to your current lender with the lowest rate quotes from the lending marketplace and ask your lender to meet or beat the lowest rate.
Most lenders want to know if someone made you a better offer so take advantage of the competitive sensation by mentioning a lenders lower rate offer to the lender offering the most attractive loan package. Responding to each call and offer using this method is sure to get you’re the loan at the desired rate and much needed cash to pocket and use as needed.
Mark Askew is the founder of the Mortgage Loan Search Financial Network at http://www.bcpl.net/~ibcnet. A mortgage and refinance rate shopping tools, tips and personal and business financial guides resource.
