Saving Money While Refinancing Your Home Mortgage
by: mortsep09
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1.Educate Yourself About Mortgages and Refinancing
When you know more, you’re in a better position to bargain with lenders and to understand what it is they’re asking you to pay. Learn about typical fees for closing and servicing, and which of those fees certain lenders are willing to waive in order to get your business.
2.Fix Your Credit Rating
Before you apply for any loan, take the time to check your most current credit reports. If there are errors on your credit reports, contact the reporting agencies to correct those errors. If you can pay off or pay down balances on credit cards before making your application, do so, then make sure that the new balances appear on your credit report. Anything that you can do to increase your credit score will pay off in lower interest rates and better terms on your mortgage refinance.
3.Fix up Your House as Much as Possible
When you apply to refinance your mortgage, the lender will want a current appraisal of your home. It is to your benefit to make sure that the valuation is as high as possible, because the value of your house will affect the amount of the loan the lender is willing to make.
4.Shop Around for the Best Refinance Deals
Like anything else, you’ll get the best prices when you shop around. Check online lenders to get quotes from several different lenders in your area — but don’t stop there. Be sure to also check with your current lender and with other area lenders who may not be advertising online.
5.Don’t Accept the First Offered Refinance Deal
Once you’ve collected several refinance quotes, sit down with them and make comparisons. Be sure that you’re comparing like loans with like loans — and look beyond the interest rate when comparing. Once you’ve whittled your choices down to two or three, get ready to interview the loan officers at those choices.
6.Ask Lenders about Closing Fees and Find out Which They’re Willing to Waive
Many fees and costs are hidden under the single label of “closing costs.” Don’t be afraid to ask for an accounting of expected closing costs up front so that you won’t be blindsided by them when you’ve accepted the loan.
7.Don’t be Afraid to Bargain
While all lenders have policies, few of them have hard-and-fast costs set up in advance. Most costs and fees are open to some degree of negotiation. If you really like your bank, but have a better interest rate from an outside lender, tell the bank’s loan officer that you’d love to keep all your business in house but can’t justify the higher interest rate. Ask what he can do for you. You might not get a lower interest rate, but the bank may be willing to drop some administrative fees or waive an appraisal if the old one is still on their files.
8.Consider Shortening the Term of Your Loan
If you’re in a position to pay higher monthly payments on your home, you can save a considerable amount of money in the long run. Moving from a 30 year to a 20 year mortgage may increase your mortgage payment by a couple hundred dollars a month, but it can shave tens of thousands of dollars off the full repayment cost of your loan.
9.Ask About Points for Your Refinance
Points aren’t just for original mortgages. You can lower the interest rate on your mortgage by pre-paying some of the interest — called paying points. Each point that you pay typically lowers the interest rate by .25 percent — one quarter of one percent — and costs $1,000 per $100,000 on the loan. It can save you several thousand dollars per point over the life of the loan, or more depending on the length of the loan.
10.Provide Your Own Mortgage Insurance
Most lenders will require you to carry mortgage insurance if your equity in the house is less than 20 percent. That means that if your refinanced mortgage is for more than 80 percent of the home’s value, you will have to carry mortgage insurance. Many lenders claim to make it convenient for you buy offering you mortgage insurance through a preferred insurer. Always be skeptical about preferred insurers. Shop around and find the best deal on mortgage insurance on your own to save money on your mortgage insurance.
Article Source: http://www.ArticleStreet.com/profile/mortsep09-17041.html
About the Author
Jeremy Foster is a freelance writer who writes about mortgages and home ownership, often discussing a specific aspect of owning a home such as refinancing home mortgage.
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