With rates still holding steady many home owners are rethinking the possibility of saving hundreds per month when refinancing. But should you refinance? To answer this question we will first need to define the financial term home loan refinancing. Home Refinancing Defined: The process of the same borrower paying off one loan with the proceeds from another loan. The repayment of a loan with funds from a new loan secured by the same property as the first loan. The new loan may be from the same or a different lending institution. Now that we know the process were better able to understand the answer forthcoming. To get our answer regarding whether to refinance or not we will need to know what our current mortgage rate is as well as our desired rate. Example: If your monthly mortgage payment (excluding taxes & insurance) is about $770 on a $100,000 loan at 8.5% you would save about $70 a month if the rate were lowered to 7.5%. Your monthly payment would be about $700. To determine how much you would save upon refinancing with the desired rate compared to your current loan rate you will need one of the following tools: A Local rate Index A Refinance Analysis Calculator or Mortgage Refinancing Savings Calculator Pull your mortgage statement and examine your current mortgage rate Youll find a good refinance savings calculator at the Mortgage Loan Search site at http://www.bcpl.net/~ibcnet/refinance-savings-calculators.html. This calculator will answer such questions as Does It Pay for Me to Refinance My House? Is Now a Good Time to Refinance? Is It Worth It for Me to Refinance? When Do I Break Even When Refinancing My Home? Before using the calculator we'll need to know exactly what local home refinancing loan rates are available. To do this simply use the local mortgage rate look up tools featured on most mortgage websites. The ideal site will not only list an index of national averages but provide you a means of looking up local rates as well. How Do I Find the Best Refinance Deal? To find the best deal youll want to put yourself in a bargaining position. Using what are called quick rate quote forms youre able to submit a request for loan rates based on a certain criteria. The criteria lenders use helps them evaluate and determine the applicants best match in terms of available loan programs and associated mortgage rates. Will I Benefit from Refinancing? It all depends on how much you save when refinancing and what you do with the savings. If you save $70 per month and receive interest on it (of just 6.5%), over 30 years (the length of most people's loans) you would build over $80,000 in wealth. How do I find the Best Refinance Rate? There are several factors involved with finding the lowest rates. One is having a fairly good credit score. The other is having made your mortgage payment on time. Another is making lenders compete for your business. When lenders know your dealing with the competition they will likely offer attractive rates up front to win you over. What if I'm Refinancing My Home with Bad Credit? Dont be dismayed. Lender will work with you to improve your credit score or offer special programs designed for less the perfect credit applicants. |
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