A guide to save more through mortgage refinancing
Refinancing is a way through which you can save more on home loans. By getting a comparatively lower interest rate, one can drastically reduce overall costs. Additionally, switching to a long term loan to pay for real estate may reduce costs, too. In simpler words, refinancing lets you swap out your old, expensive mortgage for a new, economical one. Here are a few ways to increase savings through this process.
Monitor the mortgage rates
When you take a loan, you have to make a payment on a monthly basis as per the rate of interest. Similarly, for mortgages, you have to pay a certain amount every month according to the existing mortgage rate. This is why you should refinance when the rate is low, so that you end up paying less. Thus, you can reduce the amount of monthly payments.
Another thing to remember is that interest rates can either fluctuate in relation to different factors like inflation or market interest rate, or it can be fixed and unchanging. In some cases, the bank determines the refinance rate according to an individual’s credit history. The bottom line is: keep your eyes on the “price” and opt for refinancing accordingly.
Use a refinance calculator
A refinance calculator can help you determine if switching mortgages will be profitable. By assessing different variables like location, credit score, property value, and term of the loan, you can get an overview of the benefits. It may encourage you to refinance with your existing lender or switch to another one. At times, it may be better to stick to the original lender to avoid spending extra on property appraisal.
Choose a well-known lender
Refinancing via top mortgage lenders has its perks. One can gain access to incredible loans on decent credit scores, stellar customer service, and quick online transactions. All in all, top lenders are known to provide a seamless experience. The companies listed below have made their name in the refinance industry and are worth checking out.
Fairway Independent Mortgage Corporation
With an array of refinance options like ARMs, conventional, and fixed-rate loans, Fairway allows you to pick an option that suits your needs. They also have an excellent mobile app through which you can interact with their expert advisers.
- Quicken Loans
This mortgage company has exceptional options like jumbo loans, Federal Housing Administration loan, and VA home loans. The company claims to let borrowers with a credit score of only 580 avail refinance. Their official website has several useful calculators, including those for mortgage and refinance.
LoanDepot
Backed by advanced technology, LoanDepot offers an extensive range of refinance services and a superior form of customer care. Their proprietary product, mello smartloan™ allows for cost cutting and quick loan processing.
Total up before making a decision
Once you choose a mortgage company and find out the interest rate, total up the overall expense of refinancing your mortgage. If the money you save with the new interest rate makes up for additional refinancing costs, then you should reconsider it. Another thing to note is how long you plan to live in your home. If you are planning to stay for a couple of years, refinancing may not be helpful in cutting costs.
Usually, refinancing fees may round up to around three to six percent of the remaining amount of the original mortgage. This includes payment for title search, lender fees, cost of closing the mortgage, inspection charges, and miscellaneous fees. So before you go ahead, consider all the expenses that can possibly be incurred. If there’s a chance of spending less than your current mortgage, refinancing will benefit you after all.
