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Mortgage Refinancing

Mortgage is a long term loan and the mortgage monthly payments form a major monthly expense. A lower mortgage rate means lower monthly mortgage payments. This is one reason why people hunt for low interest rates on a mortgage.

As we know, there are two types of mortgage rates i.e. fixed and floating, and different people prefer different types of rate. Again, the prevailing market rate keeps changing all the time. So it¡¯s quite possible that you entered a mortgage at a rate that is higher than the current rate. This is when you start thinking of mortgage refinancing. By mortgage refinancing we mean full payment of the current mortgage loan by entering into a new mortgage loan at a lower rate. So mortgage refinancing starts making sense as soon as the difference in the mortgage rates becomes significant (say 1.50-2% points) i.e. prevailing market rate comes down significantly as compared to the mortgage rate on your current mortgage.

Mortgage refinancing decision would, of course, also depend on the remaining term of your mortgage (for mortgage refinancing would make no sense if you had just a short period of say 4-5 years remaining on your current mortgage). These criteria for mortgage refinancing are based on the various costs associated with mortgage refinancing. These mortgage refinancing costs include prepayment costs for the current mortgage, closing costs of the new mortgage and other fees etc. Generally, people use mortgage refinancing as a tool to move from a higher adjustable rate mortgage to a lower fixed rate mortgage. Though the reverse is possible too in some cases but adjustable rate mortgage to fixed rate mortgage is generally the case.

Another reason for mortgage refinancing is ¡®need for money¡¯. So, if you have built a significant home equity, you can use mortgage refinancing to get a home mortgage loan that will generate cash for you (by bartering your home equity). This money generated from mortgage refinance can be used for various purposes like financing the education of children, debt consolidation or home renovation. Debt consolidation is one big reason for mortgage refinancing. You can use mortgage refinance for creating money to get rid of high interest debts (like credit card debt, personal loans etc) and hence save money and your credit rating too.

By mortgage refinancing you can save thousands of dollars in terms of the total interest you pay over the term of loan. So mortgage refinancing is surely a good option but must be exercised only after proper evaluation of the situation and of your own needs.

Online Mortgage Refinance Quotes - Tips to Finding a Better Rate

Do you know the benefits on the Internet today when searching for a lender to refinance your mortgage?

It definitely can be a daunting task and even an agonizing search to get lined up with a refinanced mortgage with better terms and rates.

Here are some tips:

Tip 1. Security and personal information

No one likes unsolicited propositions and today there are companies that take your privacy very seriously. The last thing you want is to simply make an enquiry and then to be barraged with Mortgage lenders that seem to come out of the woodwork. Reputable companies will display on their web site how your personal information is used and what is collected. Never deal with a web site that does not clearly indicate how your personal information is used and what a steps they take to prevent fraud.

Tip 2: Competing lenders under one roof

There are dedicated companies on the internet today that are not actual lending institutions but provide you with multiple financial service providers that want to compete for your business. This is a big advantage for you in a competitive marketplace because it really reduces the time searching for a lender with a mortgage that has better rates than their competitors.

Tip 3: Know your only shopping to refinance your mortgage

When different lenders contact you, let them know that you are comparing their Refinance options and rates with other lenders. They don¡¯t necessary want to lose you to the competition and may even go to better lengths to get a better rate than their competitors.

Tip 4: No cost to you for information

Reputable financial institutions know that they are competing for your hard earned dollars and getting information to you should not cost anything. It is only after you decide to go with a certain lender and the deal closes, then transactions complete.

Tip 5: You are not committed to any lender for a quote

Companies that provide you with multiple lenders and the financial institutions giving you their quotes know that you are doing comparison-shopping for better mortgage rates and terms. You are under no obligation to go with a certain lender when you receive a quote. Even when you have all the information, it is your choice to go with a certain lender or to stay with your current mortgage lender.

In Conclusion, more than ever today, many companies take your privacy very seriously especially in the prevention of fraud. Instead of hunting for a lender one by one, there are companies dedicated to provide multiple lenders saving you a time-consuming search process. There should never be any cost or obligation to getting the information you need to make better decisions. Lenders will even give the extra effort knowing the competition may take your business possibly giving a better refinance deal than expected.