The current mortgage industry is extremely competitive and homeowners are opting for refinance to reduce their monthly payments and avoid the higher interest rates that came with adjustable rate mortgages. However, refinancing should be a major consideration for any homeowner who is looking to minimize their financial burden, so it should not come as a surprise that there are many different loan offers out there in today’s market. Here are five tips to help you decide which refinance option will work best for you.
Shop Around: It is easy to get caught up in current refi rates and get all-in-one financial packages from one lender, but shopping around will help you discover the best deals. Comparison shopping for your home mortgage loan will help you find the lowest current real rates, the lowest closing cost, and the lowest overall loan balance. When shopping for your new mortgage, keep in mind that many lenders will offer you a low interest rate for the first few months of the loan, then gradually increase the interest rate. This is because they want to make sure that you will stay with them as your house payment will be considerably higher when the first few years of your mortgage are behind you. Lenders are becoming more strict about lending money at lower interest rates now, so it is a good time to shop around.
Choose Your Term: If you are looking for a long-term fixed rate loan, you may be better off opting for a longer loan term. However, if you are planning on rebuilding your credit score over the next several years, then you may want to consider an adjustable term. If you opt for the latter, your mortgage refi rates will tend to be lower for the first few years. You can learn more about choosing a fixed or adjustable term rate for your home loan mortgage by registering for a free mortgage guidebook. FHA and VA loans are also available to help you lock in the best refi rates for your circumstances.
Sell Your Property And Transfer: If you own a home, but want to quickly move to another property before the current refi rates start to add up, you can sell your property before closing. Many lenders require a transfer of title before issuing a new mortgage to a new buyer. A title transfer fee may apply. You can learn more about transferring title from Mortgage Lenders Online.
Find Out The Mortgage Rate: When you shop around for a home loan, you will likely notice that the rates you are quoted do not include certain fees that might be applicable. These include title fees, points, closing costs and prepayment penalties. For example, when you look at a 30-year fixed mortgage rate, you might not include title fees in your calculations because they are calculated only upon closing, and not prior to closing.
Find Out The Mortgage Originator: When you work with a mortgage originator, he/she will help you find the best refi deals. This means finding the lowest interest rate and closing costs. However, it is important to remember that the originator works directly with the lenders to get the best deal possible for their clients. The goal of a mortgage originator is to find a mortgage that will fit your goals and financial situation, not your friends and family’s financial situation.
Go Shopping: The last, but certainly not least, is to go shopping for a new home loan. Remember that you have several different options, including a refi, interest only, or mortgage rate swap. Before choosing a loan type, it is important to talk to various lending institutions. Ask about the different programs offered. It is also important to compare loan offers from a number of different lenders.
Talk To Mortgage Lenders: Once you have found a potential lender, talk to them about your interest rate needs. Ask about any special programs they offer and about the potential for refinancing or lowering your interest rate. When you are talking to a particular mortgage lender, remember to ask specifically about your credit score, your loan amount and your down payment. Your lender will be able to tell you whether or not you are a prime candidate for a mortgage. If you think you are, keep looking!