Refinancing Mortgage Guide

2007-03-08 10:33:40

( Financial )



There are certain things to remember before applying for refinancing mortgages. First, you must give consideration to the cost of refinancing loans. Determine whether current mortgage refinancing rates are lower than the rates of your present home loan. You must not forget to include service fees in the computation of the refinancing cost. There is really no point in getting refinancing mortgages that have higher interest rates than your current home loan. Secondly, you must also look into the quality of the loan provider’s service.

Advantages of refinancing mortgages

The key benefit of refinancing loans is the reduction of your monthly mortgage payments because you could swap your current debt with a new loan with lower interest rate. Refinancing mortgages could also help you utilize your home equity to consolidate your debt, repay other loans or secure cash for big acquisitions. Lastly, refinancing mortgages could not only give you the option to shorten or lengthen the term of your debt, but could also help modify your interest deduction cost for tax purposes.

Steps in refinancing mortgages

Know the present trend in interest rates. You can check the real estate section of some Sunday newspapers or the Internet for the current refinance loan rates. You can also get this information from mortgage brokers.

Determine the type of loan you want. There are several types of refinancing loans you can choose from – adjustable, fixed or a mixture of the two.

Compare your current home loan with possible refinancing mortgage options. In order to do this, you must first identify your refinancing mortgage's monthly payments. There are online mortgage calculators that could help you with this computation.

Determine how much you can save on your refinancing mortgage. You can get the amount of savings on your new loan by subtracting your existing monthly home loan payment from your refinancing mortgage's monthly payment.

Know how long you intend to stay in your house. Refinancing your mortgage is ideal if you plan to live in your house longer than the period it will take you to earn back your investment.


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