Homeowners across the country are rushing to take advantage of the near all time low mortgage rates currently available. A lot of homeowners who bought their home a few years ago could be paying 10% or more for their mortgage rate, with rates are currently around 5% a mortgage refinance will save them thousands. Before refinancing you must be aware of some of the costs involved. There will be closing fees, title insurance costs, appraisal fees, and sometimes a prepayment penalty is in the fine print of your current mortgage. Generally, you will benefit from a mortgage refinance if you can secure a rate of just 1% (Hopefully more) lower than your current rate you can see big time savings, every month. Below is a list of 3 benefits that can be had by refinancing your mortgage at a lower rate.
1)Lower Monthly Payments – When you lower your mortgage rate you typically will owe less every month for your mortgage payment. Every little bit adds up with such large loans. Thousands of dollars can be saved throughout the course of the loan. The actual savings though depend on your personal financial situation. Ask your mortgage lender to help you crunch the numbers and see the true savings.
2)Changing The Type Of Loan – A lot of homeowners who refinance are wanting to get out of their ARM (Adjusted rate mortgage) which has gone up. Typically refinancing into a stable fixed rate mortgage is the way to go. This will ensure that your mortgage payment stay the same throughout your loan. You will never have to fear that out of the blue your mortgage payment will just go up.
3)Cash Out Your Homes Equity – If you have been making mortgage payments for a couple years you most likely have built up a lot of equity in your home. Your homes value has also probably went up during that period. This allows a homeowner the option of getting a large chunk of that built up equity through a cash out refinance. You can use this money for anything you wish, although it is recommended to use it to better your financial future.
Be sure to compare a variety of different lenders rates and packages. Once you find a lender you like get a quote written down. Take this exact quote to different lenders and more often than not they will match or beat it. Always a potential lender anything you can think of. They are professionals and often can help you understand the situation. Refinancing a mortgage can be beneficial if you do it the correct way. It also can cost you a lot of money if it is done wrong.
-M Petrone

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