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Mortgage Refinancing Factors You need to know

Before facing served by a lender, before you apply for a mortgage refinancing, there is, of course, research.

You should never be alienated in the discussion. Know the common phrases used in the deal in order to keep track of the discussion and know what your location is. Not everybody is a economic analyst, but you need to know enough. So here are the essential elements on mortgage refinancing that you need to know before seated at that table:

Up-Front Charges or Closing Costs
Closing costs are fees and other miscellaneous billings that come in a typical mortgage refinancing package.

Insurance fees, attorney charges, title insurance as well as other costs are included in this category. You will need to know what the final sum would be right before an individual close. If it is definately not the sum that you had in mind, then perhaps it’s best to re-assess and get a better price somewhere else.

Think about paying points because the initial amount the particular mortgage financing company is actually asking to start the brand new loan. Consider it as deposit. It is usually a considerable amount this really is in exchange for lower payments, lower interest rates and/or a longer term.

Points are usually a percentage of the loan sum, so when they say 5 items, it means they are requesting five percent of the loan harmony upfront.

Mortgage Term/Duration
That one is easy to understand. This implies the length of time you accept pay off the loan and it is interest. Know that the longer the duration, the more the interest is going to take away from you. Alternatively, a shorter length means higher monthly obligations, but saving a lot more money in total.

FRM and Equip
These are the two types of refinancing mortgage interest rates. Fixed rate mortgage, as its name suggests, gives you a fixed rate of interest in the new loan. This can be favorable on lengthy mortgage duration.

Adjustable rate mortgages on the other hand, is altered periodically, according to numerous factors in the market. It could also work for you, depending on your situation.

Prime and Subprime Lenders
Subprime lenders are usually financial companies that may approve of the loan even if you have poor ratings or credit. They aren’t as orthodox or as strict since prime lenders. Nonetheless, their terms might be different that traditional loans. It is not astonishing for them to offer you greater rates for mortgage loan financing.

Check your credit ratings first. You may find that you are enough to be eligible prime loans.

Credit ranking
Credit rating pertains to the history of payments and obligations in negotiating your debt. Before sitting at that table, it is advisable to know your credit score and history well. A good and poor credit rating will modify the rates that you can get.

Present Interest Rates
Do your research and know what interest rates are available out there. Know what limitations can work for you and what’s not possible for your spending budget. Compare your current type of mortgage and the interest rate you’re aiming to get. Shop around and consult other lenders if possible.

In the event you come across a term you do not understand in your conversation, do not hesitate to ask immediately. Clear communication is essential in getting the right mortgage refinancing loan for you. Good mortgage company representatives will also be wanting to explain to you, because a smooth conversation does develop into a good deal.

Comments: 27

  1. Tawanda February 27, 2013 at 5:09 am Reply

    Do banks do out of state mortgage refinancing?

    My current bank in Iowa does not do this, even though I have an account with them and they’ve met me before.

    Another bank I used to have an account with WILL do out of state refinancing for me, so I was just wondering if it’s the bank’s choice not to this? Or is it a law you HAVE to be in the state?

  2. Brigette April 16, 2013 at 6:58 pm Reply

    There is a lot of talk about mortgage modifications, refinancing and new mortgage rules, but most info is so basic that everyone just keeps repeating the stuff already known. Can anyone suggest a place with more advanced and very specific articles stating the facts with references back to the primary sources?

  3. Eugenio May 27, 2013 at 9:39 am Reply

    Their are so many fees for refinancing could anyone tell me what i will expect to pay? My house costed $280,000 but weve only owned it for 3 months. Co owner wants off mortgage and refinancing is the only way.

  4. Lavern June 2, 2013 at 9:46 pm Reply

    I’m trying to find out if you can see a second mortgage or refinance on a tax record.

  5. Paulita June 2, 2013 at 9:47 pm Reply

    My brother helped me buying the house off. Now I need to finance the house to pay him back. Will this be considered a new mortgage, a refinancing or an equity loan (since they have different interest rates…)

  6. Trista June 3, 2013 at 2:27 am Reply

    I am working with my original lender to refinance my house, but I’m curious as to what advantages I have of looking somewhere else. Can the rates be lower from one lender to another or does the market pretty much make it the same for all?

  7. Rodger June 5, 2013 at 2:09 am Reply

    I am closing on a house in May 2013 and am using the FHA 203k full loan to buy a home that needs serious (but easy) repairs and needs updating. Because it is FHA, I will be paying the UFMIP and will be rolling it into the loan. In 3-4 months once renovations are complete, I will be refinancing into a conventional loan because:

    1. The APR and terms are better and I easily qualify
    2. The monthly PMI on a conventional loan will be only .9% at worst (but likely .52% with my LTV ratio of 90) and FHA MIP is a standard 1.3% with LTV <95.
    3. If I do happen to have monthly PMI with conventional refinance, I will not be stuck paying it for the life of the loan like I would be if I kept FHA or refinanced into another FHA loan. A sarcastic thank you to the new FHA rules effective 4/1/13.

    I understand the tax rules change from year to year, but does anyone know that if I purchase a FHA mortgage AND refinance into a conventional in 2013, if the UFMIP can be itemized for my 2013 taxes in full? If I am correct, current tax laws only allow you to write off 1/30 of the actual UFMIP amount per year because it is rolled into and technically paid down over a 30 year loan. But that is set to expire at the end of 2013 anyway, so I would lose out on that deduction if I stayed with FHA unless the laws are extended.

    Thank you!!!

  8. Gerald August 15, 2013 at 9:03 am Reply

    loan modification, mortgage refinance, home mortgage refinance

  9. Alberto September 3, 2013 at 12:37 am Reply

    I have a high interest rate mortgage, but I am current on it. I owe about 90% of the value. Since the gov’t is offering a mortgage refinance plan to lower the rates, maybe I should not make payments for 90 days?

  10. Herman December 23, 2013 at 3:23 am Reply

    I’m planning to relocate, but current owe a mortgage for $50k. I also have a bankruptcy on my record thats a couple of years old. I’d like to find new home in the state I choose to live in. Would I be able to get a second mortgage or refinance my current home in order to pay for a new one?

  11. Dagmar December 29, 2013 at 7:47 pm Reply

    I just heard about mortgage refinancing and i would like to know what its benefits are

  12. Lonnie February 18, 2014 at 6:35 am Reply

    I come to you in search of an answer as my banker seems is being very vague and untimely in getting me answer to my questions. My wife and I recently locked in our 30 year mortgage rate of 6.025%. With the rates dropping lower and lower we asked our banker if we could refinance at a lower rate (near 5%). She basically told us it would cost us more in the long run. I can’t figure out how she came to that. Assuming that rate deduction knocks off, say $120, a month (normally we pay about $1,625/mth); how would we end up paying more over 30 years? This is assuming we’ll still be paying about $1,600/mth that we budget for? Let me know guys…my bank recently pulled their ‘mortgage rate tracker’ from their site; which is adding to an already huge complaint list about my lender.
    -We built a new house and were under the ‘construction window’ until this past June when we locked into our 6.025% rate.
    -We’ve been living their for less than 2 years.
    -The banker spoke to my wife today (I’ll add as much as she remembers:
    -We are in a new credit ‘bracket’ with the bank…something they just started to do, apparently in the past couple months. She said the bank added these brackets after some mortgagees(sp?) could not complete payments…they’re stricter on their loans (we’ve been making payments on-time, plus extra to the principle).
    -She said the banker told her we have a different loan to house value (?) than we did when we transfered over from construction.
    -Right now (banker said) they’re only going as low as 6.3%, but she estimates with Obama’s new plan, if invoked, would drop the rate in our ‘bracket’ enormously.
    -We plan on retiring and living in the house the rest of our lives(60+ years)
    -Any suggestions on where to go?

  13. Moira February 21, 2014 at 9:22 pm Reply

    based off of the most common outlook for the housing and financial markets, are mortgage and refinance rates going to decrease?

  14. Lesley February 22, 2014 at 1:45 am Reply

    if you are going to refinance to a lower interest rate. how much lower should the rate be for it to be worth your while.currently 6.5

  15. Maxwell February 22, 2014 at 5:39 am Reply

    I have to opportunity to refinance my mortgage and cut my interest rate by 2% (7.5% to 5.5%), which will save me $350 a month. We have $265K left on a $271K loan. When all the closing costs ($3,900), insurance and escrow are rolled in, the cost comes to $281K. Are we making out on the deal or is this a bad decision? Side note: We are unsure of how long we will be living in the house. At LEAST the next 2-3 years.
    Additional Notes: The escrow payment is to replenish what is in there with the new escrow company. Lender says I will be receiving a check from my current escrow with essentially the same amount.

  16. Fabian March 9, 2014 at 6:16 pm Reply

    home loan modification vs mortgage refinancing, are they the same thing?

  17. Hipolito March 9, 2014 at 8:30 pm Reply

    I’m two years into a 5 year ARM with an interest rate of 4.375%. I’m worried that interest rates will just keep climbing and that I’ll suffer for it in the long run if I don’t refinance. I do have a 2% cap per year after the fifth year. The rate could get to above 11% total if I don’t refinance. However, I just cringe at the thought of refinancing at a HIGHER rate, even though it may be better in the long run.
    Just to clarify, the ARM is fixed for 5 years (but can go up 2% a year after that) and I’m considering refinancing into a 30-year fixed loan, even though the rate will be higher.

  18. Tisa March 9, 2014 at 8:38 pm Reply

    need approval without government

  19. Curt March 11, 2014 at 3:24 pm Reply

    I am a US homeowner. Instead of refinancing, I wanted to explore the possibility of a reverse mortgage.All I have seen so far is that this is only good for homeowners aged 62 or more. Is there a company that provides reverse mortgages for those younger than 62?

  20. Rocco March 12, 2014 at 1:12 pm Reply

    Would it be worth refinancing a home loan to get a lower rate? We could decrease the rate from 6.5 to 5.5 but it would add $12,000 to my current loan amount. It would remain a 30 year fixed. We’d also get to skip two months of payments (which is actually added into the loan, not really “skipped”); but it’s still money in hand. The current mortgage is less than a year old. Would the refinance be worth it?
    I forgot to say, there are no prepayment penalties. And the added money to the mortgage will make the mortgage more than the house is currently worth (though that may change eventually…hope I hope).

  21. Emmitt March 13, 2014 at 11:09 am Reply

    I’m trying to get my stepmom to refinance but she said her co worker and some other people told her that when they tried to refinance, they went to banks but they all said that “Sure you can refinance but you have to come back in five years and do it all over again and pay refinancing charges/closingcosts/etc fees”.

    I’m thinking they were telling my stepmom about ARM rates or something to the likes of that. But FIXED rates are guaranteed Locked-In, right? Unchangeable, right?

  22. Oswaldo March 21, 2014 at 7:49 am Reply

    Hi I have a mortgate of around 2 years old and is a 30 year fixed rate at 6.5%. With interest rates being slashed right now and house prices dwindling it would make a lot of sense to be able to refinance the mortgage at a much reduced rate, lower the monthly premium but still pay (ie overpay) the same amount each month to the mortgage company thereby paying of the principle faster and possibly ending up in a few years time with some equity back in the home. If I leave it as is the market is going down as fast as I’m paying off the principle and am therefore no close to actually owning my home. The other alternative to over paying is refinancing at a 15 year fixed rate loan as that seems to be giving me around the same monthly payment as I’m paying out now.
    But the question is, with no equity in the house will my current (or even another) mortgage lender even look twice at refinancing (I understand that lenders are reluctant to give out loan to value ratios of higher than 70-80%)

  23. Ione March 25, 2014 at 1:04 am Reply

    Where is a site that is simplified in answers regarding mortgages, loan companies, interest & everything else.
    Every time Hubby gets a letter offering to refinance us
    & lower our monthly payments,
    & skip a mortgage payment, plus return our escrow
    I smell a fish & Hubby sees a great! opportunity to save a few bucks so,…
    Where is a site, with simple explanations, that can answer any questions about mortgages.

    (For example: Just how well is Countrywide doing? Do we want to get away from them? Are they about to sell our note to a Mexican bank & we’ll start having to pay in Pesos?)

    So do you know of a site that can answer mortgage questions in an easy to understand way?
    Thank you,
    Harry Gams

  24. Ervin April 23, 2014 at 5:45 pm Reply

    Is it better to try and refinance with your current mortgage company or go out to another company and refinance? Does it really matter, will it be the same percentage rates anyways?

  25. Hipolito May 7, 2014 at 2:05 pm Reply

    Since the deed is in my name but the mortgage is still in the Sellers name, how do I refinance it

  26. Jacque May 17, 2014 at 8:10 pm Reply

    John and Jane each own 50% of a piece of property. That property has a mortgage. About 10 years go by and John is now taking all the responsibility for taking care of the property; other than being listed on the deed, Jane is not involved at all. John refinances the mortgage without Jane’s participation. Is Jane liable for that new mortgage? Or is Jane’s financial responsibility basically paid off when the first mortgage was paid off by the refinance? Or could Jane have been put on the new mortgage without her knowledge or consent?

  27. Rene June 13, 2014 at 2:45 pm Reply

    I’ve heard from a friend that Obama came up with a new plan, anyone know what that is or about? Whats the right way to go to lower my payments without having to refinance? Thanks

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