When you financed your home, interest rates may have been low on you ARM, maybe you were “creative” with your loan application and are now feeling the effects, maybe your credit and finances were worse then than now and a refinance can actually save you money every month. Either way, here are some common questions about refinancing a home mortgage.

Here are some of the most common questions homeowners have when Refinancing their Home Mortgage:

Question: How is your monthly mortgage payment calculated?
Answer: Basically, interest rates ultimately determine your monthly mortgage amount. The interest rate on your home loan may be an adjusted rate mortgage (ARM) which fluctuates every month, or a fixed rate mortgage which will stay the same every month. The type of loan you have Fixed Rate, or an ARM, will also determine your monthly mortgage payment.

Would Refinancing or Modification of my Home Mortgage be a Good thing to do Now?
Answer: Well, as we stated earlier, interest rates will determine the amount of money you can potentially save through a home mortgage refinance or modification. Also very important to know before refinancing a home is what your current interest rate is on the home loan as well as how much you owe on it. If you are within a few years of paying off your mortgage, or if mortgage interest rates are less than 2% lower than the interest rate you currently have, a home mortgage refinance or modification may not be the correct thing to do. The reason for this is that your mortgage will be paid off sooner than later and the savings and hassles of a home mortgage refinance or modification may not be worth it.

Otherwise, homeowners who have more than 5 or even 10 years remaining on their home loan should only refinance if they are able to obtain an interest rate which is over 2% lower than their current home interest rate.

Is their any information I should have before a Home Mortgage Refinance or Modification?
Answer: Yes, there are some basic files and information you should have that will streamline the process and potentially save you time and money. It is a good idea to know and have a copy of your property value assessment. If you do not have a copy of this, one will be available to you from the local tax commissioner. Also beware of the housing trends and market prices of homes recently sold, and for sale in your local market. This information can dramatically reduce your interest rates, and will certainly increase the speed of the refinance process.

Knowing the basic answers to these questions will give you a tremendous head start when you decide the time is right to refinance your home loan. Always remember only you can ultimately ensure you are getting the best refinancing deal that you possibly can. Be vigilant and do your research on potential mortgage lenders, your financial situation, and your financial long term goals.

-M Petrone

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