Mortgage refinancing can save a homeowner a lot of money over the course of the loan. However, this is only a good thing to do if it is done properly, and at the right time. Here is some basic advice as to when to get a refinance, and how to ensure you do not get ripped off.

Deciding When to Refinance a Mortgage
When deciding if a refinancing is the right thing for you, take the following things into consideration:

1)How long do you plan on living in the home? If you are not planning on living there for much longer, a refinance may be too costly to see any benefit from. Always know what your break even period is and make your plans from there. If you are trying to sell your home in a year or two, refinancing may not be a good choice for you. Also, there may be prepayment penalties which you need to be aware of.

2)What is the new interest rate? When refinancing if you do not get a lower interest rate, you will be paying thousands of extra dollars for your home loan. It is always recommended that you try to get a fixed rate mortgage, with the lowest interest rates possible. This is one of the best ways to see the full benefits of a mortgage refinancing.

3)Closing costs always need to be considered. These fees and costs need to be accounted for when doing the math. If the interest rate is not low enough to recover these costs in a reasonable amount of time, refinancing may not be a good decision at all.

4)Cash out refinancing. Home equity loans, or cash out refinance options may be a great thing for a homeowner with financial problems that need cash. However, you must consider the loss of built up equity you will face, and the costs of borrowing must be calculated. Always have a good plan for the money, and think long term.

Be Ready, and Shop Around for the Best Mortgage Refinance Deal
Before you start the home refinancing process, it is advised you request a copy of your credit report. Look at it and see if there are any problems you can fix, or errors which need to be corrected. Try to improve this report as much as possible, remember every little bit helps. The better this report is, the better interest rates and options you will get.

Typically, a homeowner should compare 4 or 5 different lenders and banks before choosing a refinancing package. Always have written quotes which include all the terms, conditions, and rates of the potential refinance deal. Also, be sure you are completely aware of all the costs associated with refinancing a mortgage and then decide which loan option is best for you.

Homeowners should be cautious of letting a potential mortgage lender or bank request a copy of your credit report. Each request will actually count against your credit rating. The best thing to do is have your own updated credit report, and make copies of it to give to lenders and banks. Let them know that if they are the ones who are selected to help them with a refinance, they will then be allowed to obtain the needed information.

Avoid or Try to Reduce Possible Mortgage Prepayment Penalties
These payment penalties can often add up to 6 months of extra payments to the cost of your mortgage refinance. Many banks and mortgage lenders are more than willing to work with homeowners who have these fees, and can reduce them or other things to win the customers business.

Approach potential mortgage lenders, and inquire if they are able to absorb some or hopefully all of the prepayment penalty. While some will say no, many will consider it, especially if the homeowner has other potential business they can being to the table for the future.

Watch Out for No Cost Mortgage Refinancing Options
Typically, if a deal sounds to good to be true, it is. Mortgage refinancing is no different. Sometimes a mortgage lender or bank will offer a “No Cost” mortgage refinance option. Homeowners should know that the costs and fees are just added into the loans total amount, which increases both the loan amount, and your monthly payment. So no matter what, there are always some kind of closing costs or fees which are eventually paid in one way or another. If they are added into the loan, you end up paying interest on these fees for the loans length. This will cost you thousands of extra dollars.

Closing costs are typically 3%-4% of the homes total price. Always get details in writing from a lender or bank to protect yourself, and your home. Ask mortgage lenders or banks what there closing costs are, and further question the ones who are above average. Make sure low cost closing deals are carefully scrutinized to make sure there are no hidden fees.

A mortgage refinance can be a good decision for homeowners who can reduce their interest rates, lower monthly payments, save money, or use their homes equity. Having a general idea of the process, closing costs and options will help ensure you get the best deal possible.

Mortgage refinancing can be a great move for homeowners with an opportunity to reduce interest rates, lower their monthly payments and save money over the life of their mortgage. Understanding all of the costs involved is critical to getting best mortgage refinancing deal.

-M Petrone
http://www.RefinancingCondo.com

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