As interest rates keep going up, a lot of homeowners are looking into ways to refinance. Here are some tips on how to refinance your mortgage.
Tips for Refinancing a Mortgage
Since six months ago, rates have been steadily going up. These rises are likely to keep happening in 2006. These increases are hard on homeowners who have mortgages with variable rates or who have borrowed money against their home equity lines of credit. People in this situation are starting to see that refinancing into a fixed-rate mortgage is a good idea, even if it's just to avoid future rate increases.
If you want to refinance your mortgage, there are a few things you should think about. You have more time to think about and compare mortgage options than when you are trying to get money for a purchase. Shop around and see what different lenders can offer you that meets your needs.
- What do you want to do? - Do you just want to pay less interest or do you also want to lower the monthly payment? Even though these questions may seem like the same thing, a lower interest rate can mean that you pay the same amount each month, but more of your payment goes toward paying off the loan's principal. This helps you pay off the note faster, of course. The most important thing is to figure out what you want to do and then find a loan that will help you do it.
- Look at different lenders. One of the best ways to do this is to get pre-approvals from different lenders. You might be worried that this will hurt your FICO score, but requests to refinance credit don't usually hurt your FICO. If you're not sure, don't give the lender your social security number. They will give you a loan offer that is less clear, but you can still read the fine print to make sure it meets your needs.
- In Writing: Once you've chosen a lender, you need to put three important things in writing. The interest rate is the first. The second is, if there are any, the closing costs. The third is whether or not there is a fee for paying off the loan early. If the lender is slow about any of these, you might want to think about getting out of the loan.
The process of refinancing a mortgage is less stressful than getting a loan to buy a home. You are in the driver's seat, so don't let lenders push you around.
