Refinancing a Home

Refinancing a home loan in order to save a few hundred dollars each month on mortgage repayments is a smart move for long term home owners. However, if you are planning to refinance your mortgage and in the near future plan on relocating, refinancing your property may cause you more trouble than the entire process is worth. According to Bills.com, “It may take anywhere from three to five years to realize the savings, given the costs incurred during the refinancing process.” If you are ready to refinance your home and are willing to wait a while to reap the rewards, home refinancing is the ideal solution for you.

 

Approach your existing lender. You already have an existing relationship with the lender, if you have always kept lines of communication open and always sent your mortgage repayments on time, there is no reason for your existing lender to turn down your home refinancing request. A benefit to refinancing your home through your existing lender is that they will often offer you special deals just to keep you from taking your business elsewhere.

However, you may benefit from keeping an open mind. Just because it’s often easier to refinance your home mortgage through your existing lender, doesn’t always mean it’s worth it. Sometimes, switching to a different lender will get you a better deal in the long term. Contact at least ten different home mortgage lenders and ask them for a quote. Tell them that you are making a general inquiry and are currently contacting multiple lenders to find the most competitive rate. Letting the lender know that he’s got some competition can’t hurt any.

Review refinancing offers.  After you have called ten lenders and received their quotes, it’s now time to review the offers. Don’t fall prey to the common tactic used to draw in borrowers. For example, a common tactic used by lenders to draw in borrowers it to offer discounter of waived closing costs in exchange for a higher interest rate.

While you will not be losing any immediate out of pocket cash, in the long run accepting such a rate can turn out to be more expensive than simply sticking by your current home loan. If you have approached numerous lenders and are yet to encounter a package that suits your needs, keep looking. There will always be a lender offering more competitive rates.

Applying for the mortgage refinance.  It’s probably been a while since you have applied for a home mortgage, and luckily for you lenders have improved on their speed a bit.  The overall home refinancing application process is very similar to applying for your home’s first loan. However, the wait time for this application will be decrease to approximately three to six weeks and you can now apply for a home refinance loan through the comfort of your own home.

That’s right, you only have leave your home if you want to, you being present during the physical application is no longer a requirement thanks to technology. Loan officers fill out an application form on your behalf with the information that you provide to them through the electronic application.

Jazmin Espinal is a professional freelance writer and the owner of Capital Web Writing, a web content solution for businesses and webmasters. 

Comments

  1. It’s definitely a great time to refinance right now for those who actually have equity in the house. Unfortunately, the number of underwater home owners is rather high and if you owe more than your house is worth, you can not refinance. If you have the equity, if you’re getting a lower rate than you have now, if you have the upfront refinancing funds and plan on living in the house for long enough to pay for that refinance fee and make a positive return — do it now as rates are very low. The way you can generally see when it will pay off is calculate your break-even point. Here’s a hypothetical example. If you have a mortgage at 6% currently and you are paying $2,000 a month mortgage and you can refinance at 5% and say your monthly payment goes down to $1,800 as a result your net savings are $200 a month. Now you must take your refinance cost, say $3,000 and divide the $200 into it to find your break even point. $3,000/$200 = 15 months to break even.

  2. I’m currently in the middle of a refinance it has taken forever…. 8 weeks to this point but my home is underwater or close to it. The Making Home Affordable plan is allowing me to refi without an appraisal and I’m getting the same rates as everybody else. Finally a government program that is working. Check out http://makinghomeaffordable.gov for more info if your loan is a Freddie Mac or Fannie Mae you could easily qualify. This is an official government site I promise. A 1.5% drop in interest rates is definitely worth my time. Good luck all.

Leave a Comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>