Refinancing Your Mortgage
By Jonathan Hansen
Refinancing is a good option as opposed to taking a new mortgage on top of your old loan
Basically, refinancing means taking a new mortgage to replace the old one. When you decide to refinance your mortgage you may need to consider the costs of such refinancing including your tax bracket and the duration for which you plan to stay in your home. You may be charged a penalty for paying off your original loan early with this new refinanced mortgage. So, it is very important for the borrower to choose the loan that will help to meet both his short term and long term needs.
Refinancing can lower your mortgage payment by refinancing at a lower interest rate. Changing the terms of the mortgage also can lower your mortgage payment. Changing from a ten to twenty year mortgage, for example, will considerably decrease your mortgage payment. Changing from the traditional payment including both principal and interest into a new payment that requires only interest also lowers your mortgage payment.
Consider refinancing an adjustable rate mortgage into a fixed mortgage if you plan to stay in your home for many years. Likewise, if you plan to stay only for few years then you may want to convert your adjustable rate mortgage because paying higher interest for many years will cost you lots of money. It is advisable to use the equity in your home rather than credit cards to finance expensive purchases, saving you much money in the long run.
It is difficult to know what will happen in the interest rate in future but, as a smart consumer, it is important to know the intricacies of the market. Any slight change may cost you lots of money.
Bottom line is that refinancing either an adjustable rate mortgage, a fixed mortgage, or a mortgage that is combined with a second mortgage will help you in the long run if you find the appropriate lender, get a good rate, and also don't pay too much for the lender to process the loan. It is important to consult with your lender to find out what types of fees will be associated with the refinance offer that your lender presents to you. Consider fees such as appraisal, loan origination fees, document preparation fees, penalties for early payment on your existing mortgage or second mortgage. Your lender should typicaly provide you with a "truth in lending" document, which will allow you to see a breakdown of all of the costs that will be associated with your new loan. Make sure that you review every line item to see that you are not being overcharged for anything. For more information on refinancing your mortgage please visit PlanitMortgage's mortgage refinance page.
About the Author
Jontahan Hansen is an expert in all aspects of home credit, refinancing, and first mortgages. For more information please visit his official site:
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