Guide to Mortgage Refinancing
A Home Buying Article Contributed by Mark Vanner
What is Mortgage Refinancing?
Mortgage refinancing is a term used for homeowners who are wishing to exchange their current home mortgage loan for another. The process involves completing payments on your current mortgage with the use of another lower rate mortgage that will benefit you and your finances better.
Mortgage Refinancing - Why Refinance?
There are a number of reasons why as a homeowner you may wish to refinance your current mortgage. Perhaps you are struggling to meet the repayments of a high interest mortgage loan and wish to transfer to a mortgage with a lower interest rate, or perhaps you are currently repaying an Adjustable Rate Mortgage (ARM's) and have grown tired of fluctuating interest rates and have instead opted for a securer fixed rate mortgage.
Another reason some homeowners choose to refinance their mortgage is if they are currently on a standard repayment scheme and wish to change to a fast track mortgage repayment policy without penalty. These are all valid reasons for why refinancing your mortgage could benefit you.
It is worth comparing the amount of interest that you are paying on your present mortgage against the current market rate, if you find that you are paying two or more percentage points higher than the market rate, refinancing your mortgage may be a very good option.
Choosing the Right Time to Refinance.
If you are currently repaying a high fixed rate interest mortgage, a good time to consider mortgage refinancing is when current interest rates decline. By changing at this time you should be able to find an alternative mortgage that can offer a substantial cut in interest repayments.
Mortgage Refinancing - Pitfalls to Avoid.
When considering refinancing your mortgage for a lower interest loan you should be aware that the advantages of transferring can take anywhere up to three years until the savings you have made become apparent, therefore this option may not be beneficial for homeowners intending to move properties with in the near future.
The process of mortgage refinancing can also be an expensive venture, however this pitfall is unavoidable if you are wishing to change mortgages.
Mortgage Refinancing - Qualification.
Qualification for mortgage refinancing is much the same as the process completed with your original mortgage loan and you will once again be asked to complete a loan application. To apply for mortgage refinancing you will be asked to provide proof of income and employment, credit history, savings and also information regarding your current mortgage such as monthly payments, any outstanding mortgage balance, mortgage lenders information if you have decided to go with a different lender and insurance and tax payments.
Mortgage Refinancing - Costs Involved.
Mortgage refinancing can be a relatively costly affair. The fee's you are most likely to be asked to pay by your lender include the application fee, survey costs, appraisal fee, homeowners hazard insurance, home inspection fee, title search, title insurance, loan origination fees and mortgage insurance. It is recommended that you approach your current lender when considering mortgage refinancing who may agree to waiver some of these charges.
