If you have had your mortgage for a number of years, then you probably could get a better deal now by refinancing your mortgage. Many people are finding that their new deal is far better than the old. Here is how you can go about getting a better deal for your mortgage and save a lot of money doing it.
Determine Length Of Loan You Need
Refinancing your mortgage means that you will need to stay in your present home for at least the next three to five years just to cover the cost of refinancing. If you do not stay about that long, it probably will not be worth it to you to refinance.
The length of time will determine what kind of mortgage you should get. If you only plan to stay there for five years, then this will help you know both what kind to get and which ones need to be avoided. For instance, an adjustable rate mortgage has a level period and a lower monthly payment than a fixed rate. If you only need it for five years, then you might try to get one with level payments for seven years just in case you can't sell it as fast as you hope.
Decide If You Need Cash
Refinancing your mortgage can give you access to the equity in your home. If you have a major home remodeling project, or need cash for college, or any other large expense including debt consolidation, now would be a real good time to get it. Using the cash from your home's equity allows you to get the cash you need at a lower interest rate than other loan types, and gives you a longer period of time to pay it back, too.
Understand The Mortgage Terms
There are many different types of mortgages out there on the market. A lot of them are not any good, and some simply will not fit your situation. Only by knowing as much as you can about mortgages and the processes involved can you get the deal you want the best one. Learn about the different types, the various fees that may apply, and even learn about the closing processes and how some lenders add hidden fees.
You also want to learn a little about the things you need to avoid when getting a mortgage. If you are thinking of getting an adjustable rate mortgage, make sure you understand the caps to know how much of an increase in payments you could experience. You also will want to know about early payoff penalties and why you should avoid this.
Compare Carefully
After you receive a number of quotes from different lenders, it is important that you look them over. You can really only compare adjustable rate mortgages with other adjustable rate mortgages, etc. Put the costs and all fees together and look at them separately in order to compare them. Look at the total costs, as well, over the life of the loan.
Determine Length Of Loan You Need
Refinancing your mortgage means that you will need to stay in your present home for at least the next three to five years just to cover the cost of refinancing. If you do not stay about that long, it probably will not be worth it to you to refinance.
The length of time will determine what kind of mortgage you should get. If you only plan to stay there for five years, then this will help you know both what kind to get and which ones need to be avoided. For instance, an adjustable rate mortgage has a level period and a lower monthly payment than a fixed rate. If you only need it for five years, then you might try to get one with level payments for seven years just in case you can't sell it as fast as you hope.
Decide If You Need Cash
Refinancing your mortgage can give you access to the equity in your home. If you have a major home remodeling project, or need cash for college, or any other large expense including debt consolidation, now would be a real good time to get it. Using the cash from your home's equity allows you to get the cash you need at a lower interest rate than other loan types, and gives you a longer period of time to pay it back, too.
Understand The Mortgage Terms
There are many different types of mortgages out there on the market. A lot of them are not any good, and some simply will not fit your situation. Only by knowing as much as you can about mortgages and the processes involved can you get the deal you want the best one. Learn about the different types, the various fees that may apply, and even learn about the closing processes and how some lenders add hidden fees.
You also want to learn a little about the things you need to avoid when getting a mortgage. If you are thinking of getting an adjustable rate mortgage, make sure you understand the caps to know how much of an increase in payments you could experience. You also will want to know about early payoff penalties and why you should avoid this.
Compare Carefully
After you receive a number of quotes from different lenders, it is important that you look them over. You can really only compare adjustable rate mortgages with other adjustable rate mortgages, etc. Put the costs and all fees together and look at them separately in order to compare them. Look at the total costs, as well, over the life of the loan.
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