When you are paying a
high interest rate on your mortgage, it’s time to consider
refinancing. This can mean great savings for you and your family.
Replacing your existing mortgage with a new, lower interest loan,
changing the term of your loan, or even consolidating all your
debts into this new loan will save you money, both monthly and
over the life of the loan.
Refinancing is one of the best kept secrets around for saving you
money, but most people never thought of refinancing. If you are
considering refinancing it is a good idea to do a break-even
analysis. Will the lower monthly payment as a result of a lower
interest rate quickly pay for the cost of refinancing? How many
months will you have to stay in the property to break even? Are
interest rates low enough now to lock into a fixed mortgage, or
would an adjustable rate plan be better? These are some of things
you may want to consider when seeking a refinance home loan.
If you decide to apply for refinancing with a particular lender,
and if you do not want to let the interest rate "float" until
closing, get written statements guaranteeing the interest rate and
the number of discount points that you will pay at closing. This
binding commitment or "lock-in" ensures that the lender will not
raise these costs even if rates increase before you settle on the
new loan. You also may consider requesting an agreement where the
interest rate can decrease but not increase before closing. If you
cannot get the lender to put this information in writing, you may
wish to choose one who will.
Most lenders place a limit on the length of time (say, 60 days)
they will guarantee the interest rate. You must sign the loan
during that time or lose the benefit of that particular rate.
Because many people are refinancing their mortgages, there may be
a delay in processing the papers. Therefore, you may want to
contact your loan officer periodically to check on the progress of
your loan approval and to see if additional information is needed.
If you are considering a refinance loan, you will be happy to know
that much information is available on the subject and is easy to
access on the Internet. You can visit a website and access a
mortgage calculator that will tell you approximately what your new
monthly payment might be at a lower interest rate or shorter term.
For many people, refinance loans provide a means to escape
crippling debt. Refinancing your home, and borrowing against the
equity is a good way to consolidate bills into one low interest
monthly payment. With so many lenders in the market place, even
people with bad credit can get refinanced.
When looking to refinance, it's always best to shop around. Even
if you know and trust your current lender, doesn't it make sense
to see what else is out there? You may end up saving thousands of
dollars.
A
loan is a type of debt. Like all debt instruments, a loan entails
the redistribution of financial assets over time, between the lender
and the borrower. 
