Secrets on Refinancing Your Home

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Mortgage Refinance
Refinanced mortgages have a few distinctive rules when it comes to closing. For one, there is a mandatory rescission clause for primary residence mortgages that permits you to annul your loan. You can decide to close at anytime, which is advantageous if you think rates will go down in the near future.

If the property is your primary residence you have three days after closing to cancel ... Read refinance mortgage article



Refinancing Mortgage Loan Expenses and Tax Deductions
Not only are your mortgage interest payments tax deductible, but so are your refinancing costs. Points can be deducted over the life of your loan. However, there are some restrictions with this program.

Deducting Refinanced Points

When you originally take out a mortgage, you can deduct the points paid the year you take out the home loan. With refinancing, you have to deduct t... Read refinance mortgage article



Secrets on Refinancing Your Home
Refinancing is ideal for homeowners who purchased their homes when mortgage interest rates were higher, and for individuals who received an adjustable rate mortgage. In these instances, refinancing for a lower interest rate will lower monthly payments, or provide homeowners with a fixed mortgage rate. Fixed rates are more advantageous because your monthly payment on the home will remain the same throughout the duration of the loan.

#1 - When to Refinance?

Low interest rates and refinancing has been the topic of conversation for several years. When interest rates began to decline, many homeowners saw this as an opportunity to lower their mortgage payments and save money. However, refinancing is not a good move for everyone. Mortgage brokers and lenders generally recommend that homeowners wait until the current market rate is at least two points below their homes mortgage rate. Refinancing for a one point difference is not worthwhile because savings are insignificant, and not worth the closing costs and fees that accompany a refinance.

#2 - Is a Refinance Worthwhile?

Lenders have different refinance procedures, thus some may not include estimated closing costs in the quote or good faith estimate. Homeowner should request this information before agreeing to sign documents. If refinancing produces marginal savings and high fees, homeowners may forgo reducing their interest rates. On the other hand, individuals who intend to live in their home for many years may benefit from a refinance.

#3 - Negotiate and Compare

If considering refinancing your home, contact your current lender. In some cases, current lenders will waive selected fees such as title search fee, appraisal fee, and negotiate a "no-cost refinance." Of course, your current lender may not offer the best rates; thus, it is wise to shop around. Online mortgage brokers are a good choice because homeowners can receive multiple offers from a single application. Multiple offers afford the opportunity to compare rates and services of various lenders.

#4 - Building Equity

Homes must have enough equity to justify a new loan or refinance. On average, homeowners are encouraged to have an existing mortgage for at least two years before refinancing. This allows time for the property value to increase and for the home to gain equity.

To view our list of recommended refinance lenders online, visit this page: Recommended Refinance Lenders Online.

Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans.

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How to Refinance Your Mortgage

Refinancing your first mortgage has several benefits. Of course, each situation is different. Thus, some homeowners may not benefit from a refinance. The process of refinancing is similar to obtaining the original mortgage. Homeowners receive quotes from various lenders, compare services, and submit an application for pre-approval. Although the refinance process is much quicker, homeowners should be prepared to pay closing costs and other fees.

Lower Interest Rates

There are many reasons to refinance a first mortgage. The major reason is declining interest rates. Within the last five years, the real estate market has experienced record low interest rates. Those who purchased their homes when interest rates were higher took advantage of low rates. Refinancing meant lower rates, thus lower monthly payments. Individual with a past interest rate of 8 or 9 percent received a dramatic reduction in mortgage payments after receiving rates of 5 or 6 percent.

Adjustable vs. Fixed

Another incentive for refinancing a first mortgage is to receive a fixed rate. Although adjustable rate mortgages are popular, these mortgages are very risky. Throughout the duration of a loan, a mortgages interest rate is free to fluctuate depending on market trends. Individuals with a current rate of 5 percent could see a 5 point increase over the next 30 years. Fixed rated are safer because the mortgage rate remains the same. Thus, a homeowner's monthly payment will remain the same.

How to Refinance?

Those considering refinancing their first mortgage have several options. For the most part, homeowners contact their current lenders for information. Because a relationship has been established, some lenders are willing to consider a "no-cost refinance." In other words, the homeowner is not required to pay high fees, or selected fees are waived. Still, some homeowners prefer to compare rates and services from other lenders. This is a smart move, and ensures that you are receiving the best rate. Mortgage brokers are perfect when trying to find a suitable lender. Brokers work with a variety of lenders and negotiate the best rate. They are successful with finding decent rates for first time homebuyers, refinances, and problem credit.

To view our list of recommended refinance lenders online, visit this page: Recommended Refinance Lenders Online.

Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans.


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