Refinancing Tips Getting the Best Deal on Your Home Loan
Home Comparisons	Refinancing Hints and Tips
Refinancing Home Equity Loans Mortgages Credit Cards Homeowners Insurance	Most homeowners are fairly adept at methods of saving money--they clip coupons to save a few dollars when grocery shopping, and they comparison shop before most major purchases. Many of these same homeowners, however, continue to pay monthly mortgage payments with interest rates that are 2%, 3%, or more higher than what may be currently available. The cost can be enormous. For example, the difference in payments between a $100,000 mortgage at 9.75% and at 7.25% amounts to $176.97 per month, or $2123.64 per year. You need to clip a whole lot of coupons to save that kind of money! Should We Refinance? Before you embark on a program to refinance your house, there are a few questions you will need to answer. By analyzing your current situation you will be able to make a more informed decision as to which is more beneficial: refinancing or maintaining your current mortgage. Questions to ask: 1) What is your current interest rate? 2) What is the current market interest rate? 3) Is the rate fixed or variable? 4) How long do you plan to stay in this home? 5) Do you have cash available for the closing costs? 6) Is the value of your home increasing, decreasing, or staying about the same? What are the short term and long term prospects for the value of your house? Analyzing your answers: 1) and 2) If the difference between your current mortgage rate and what is available is approximately 2 percentage points, it may be to your advantage to refinance. If the difference is 1 1/2 points or less, it may not make sense to refinance. 3) If you have a variable rate, the rate is continuing to climb every year, and the current market interest rate is lower, it may be advantageous to refinance your house. 4) If you plan on staying in your current house for more than three years, it may make sense to refinance. If you feel confident that you will be moving in less than three years, it will probably be better to stay with your current loan (unless there is a large variance between your current interest rate and what is available). 5) In most cases, you will need at least some cash for closing. FHA and VA loans will allow you to "roll-in" certain closing costs into the new loan, but some cash will still need to be available. 6) If the value of your home is staying the same or increasing you may be able to increase your equity more quickly with a lower interest rate. If the value of your home is decreasing, it may not be a good idea to throw "good money after bad" for closing costs when your equity position may well be eroding. One of the biggest advantages of refinancing is often the ability to reduce your loan term without substantially affecting your monthly payment. The following example compares a 30 year term mortgage, originally financed at 9.25% APR and with 23 years remaining on the loan, with a refinance for 15 years at 7.25 % APR. Original finance amount was $100,000. Current balance is $93,808. Original Loan Refinanced Loan Mortgage Amount $100,000 Mortgage Amount $93,808 Monthly $823.00 Monthly $856.00 Payments Left 276 Payments Left 180 Total of Remaining Payments $227,148 Total of Remaining Payments $154,080 To summarize, if this loan were to be refinanced for a 15 year term, the payment would increase $33 a month to $856 but the term remaining would decrease from 276 months to 180 months, and the total payments remaining would decrease from $227,148 to $154,080. Note: Closing costs for the refinanced loan not included in this equation. One of the best sources we have found for refinancing is Quicken Loans. Submit an easy loan request form, and you'll begin receiving real loan offers from up to 4 lenders--not "leads" or phony come-ons. The process is simplified and you get comparisons from different lenders. Plus, there are no broker's fees! It really can't get much simpler. Click to Compare refinancing offers now
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