Options of Refinancing a Mortgage

If you are looking for options to refinance your mortgage, you would be happy to find out that refinancing can result in substantial savings. There are several options to go about this, the first being to discuss refinancing with the original lender. You can also try to modify the terms and conditions of your current mortgage, choose a new lender, or take cash out when you are refinancing.

Before you consider these options, you should check whether you will qualify for a low interest rate. This depends on your credit score, so make sure to check it. Then, you need to have a clear idea what refinancing is and does – it does not eliminate debt but it acts to restructure it. Assess the savings you will get with refinancing against the cost of it. If you are unsure how to do this, you can try some of the refinance calculators available online. You can calculate your savings by entering your monthly payment, years left on your loan, balance left, interest rate, and other information. In addition, you can calculate how much refinancing will cost you. You will be asked to enter the following: credit check, application fee, your attorney’s fee, the lender’s attorney’s fee, and title insurance. You should also enter local fees (e.g. transfers and taxes), appraisal fee, and inspections.

You have to think of your mortgage term at well. If you are planning to stay in your present home for just a couple of years, you may consider an adjustable rate mortgage, along with favorable interest rate caps.

With these considerations in mind, you should now consider your options. If you decide to work with your current lender, you probably know that many lenders actually have programs for existing clients, requiring no documentation. You will get a new mortgage, but the lender has most of the required information in hand. This is one option and in fact, an option that finance experts recommend. The second option is to modify your current mortgage. If you have several hundred dollars in savings, you can pay to your lender and have the interest rate reduced. The process is not difficult, and you just sign some paperwork rather than go through a closing. However, some lenders sell their mortgages at the secondary market, and if this is the case, you may not be able to modify the terms of your mortgage.

You can find another lender as a third option. With the boom in refinancing, many borrowers actually go with a new lender. If another financial institution offers low interest rates and monthly payments, it may pay off to approach a new lender, as it will help you free up more cash, making your debt more affordable and manageable. Finally, you can take cash out in order to consolidate. One thing to remember is to be particularly cautious of creditors who solicit you. Choose a lender at a time you think is right to refinance. Do not allow lenders to convince you that you should refinance with them.

If you don’t have time or do not want to deal with creditors, you may use the services of a mortgage broker. He/ she will be able to offer you unique loan offers and special packages, often from wholesale lenders. Just make sure you are hiring a professional and their fees are not excessive.