Rates are on the way up and will continue to be so in the next few months. This scenario is making it harder for the homeowners who have mortgages with adjustable rates or have used their home as equity to get another loan to cope. People in these circumstances are pushed into considering the option of having their mortgages refinanced with a fixed rate so they will be protected against the escalating interest rates.
If you have started to look into mortgage refinancing, there are two things which you should bear in mind. This type of loan will not be used to purchase an urgent need, so you have the luxury of time to assess and match up your options. Look around to see what the lending companies are offering and decide on one that most fit your requirements.
1. Define your objective – Is your objective to decrease your monthly outlay on payments or to lessen the money you pay on interest? Looking at this on the surface, opting for lower interest rates could still render almost the same total monthly payments. The difference lies in that a bigger portion of your payment is applied to the principal rather than the interest which will consequently bring about a shorter payment period. So if you have decided on your objective, the next step is to find the type of loan that will let you meet your objective.
2. Compare Lenders – this scan be easily done by requesting for pre-approval from a number of lenders. You might feel worried that this might affect your FICO sharing, however, refinancing credit requests does not affect FICO ratings. However, if you are not confident enough, do not give the lending company your security number. You will just a generic loan offer but you will still have the benefit of studying the fine prints to ascertain if this loan is what you really need.
3. Official Quotation – As soon as you have decided on a lending company, you have to have an official agreement done to pin down the interest rate, the cost for closing your original mortgage and the pre-payment price connected to the loan. If the lender hesitates to furnish you these, then you should think about looking for another lending company.
Applying for a refinancing mortgage is easier compared to applying for a loan which will be used to purchase something. You are the client here and they are vying to get your business so do not let them get their way with you.