Posted on: 13th Sep, 2004 01:01 am
Refinancing is a good option that can help you to get rid of high interest debts. But you can only benefit from it if you can secure a lower rate on your loan and also make minimum payments to the lender. You can try shopping for some of the best rates and costs while you are into refinancing. Besides, an awareness of the entire loan process also helps you get through the deal easily. This article contains an overview of the refinance process in simple steps so that it will be easier for you to interpret what the process is all about.
Steps to follow:
- Decide how long you are going to stay in the property.
- Contact your first lender and find out what he has to offer. Otherwise start shopping with other lenders.
- Get pre-qualified for the loan
- Decide upon the type of mortgage
- Check out the factors that may influence the interest rate on your loan. These are:
- Your credit score.
- Loan amount.
- Number of points paid.
- Lock-in-rate.
- Compare the interest rate on offer with that of your existing loan.
- Get pre-approved with a lender.
- Calculate the monthly loan payments
- Subtract new payments from current monthly payments. The difference gives you the savings that you can earn by getting a low rate.
- Divide the monthly savings by the total closing costs. That gives you the number of months within which you can recover the closing costs. This time period is known as the Break-even period.
- Compare the months obtained with the time period you're staying in the house. If it exceeds the time period, then refinancing may be a good choice.
- Follow the simple steps that will take you to loan closing, that is, towards finalizing the deal.
- At closing time you'll have to sign the loan documents and the mortgage note. Besides, you will have to pay for the closing costs and prepayment penalty.
Related Readings
Welcome jerri,
As you don't have equity in your property, you won't be able to refinance the mortgage. However, if you want to save the property, then you should get in touch with your lender and apply for a loan modification. Depending upon your financial hardship, the lender will let you know whether or not your request would be accepted. If your request is accepted, then your monthly payments will be reduced and your loan term will get extended.
As you don't have equity in your property, you won't be able to refinance the mortgage. However, if you want to save the property, then you should get in touch with your lender and apply for a loan modification. Depending upon your financial hardship, the lender will let you know whether or not your request would be accepted. If your request is accepted, then your monthly payments will be reduced and your loan term will get extended.
i am thinking about refinancing my mortgage as the rates are now significantly lower than my current rate. i have however run into some problems as some lenders say I can not refinance because my debt to loan ratio is to high. I am having trouble understanding this as the monthly payment would be much lower if I were to refinance and therefore even more able to make the payment. I have never missed a mortgage payment in 10 years. Do you have any advice for me?
We have a 30 yr loan at 5.25 %,23 yrs left to pay on it.We can refinace for approx. 2K closing costs with our current lender BOA for 15yrs at 4.25% or 20 yrs at 4.50.Is this a good deal or should we shop around?We have lots of equity and plan to stay in the home at least 5-10 yrs. THX so much. Karen LeRoy
hi kleroy,
it is always better to shop around before you plan to refinance the loan. this will let you know what type of rates and terms you would receive from the other lenders. there might be lenders who can offer you lower rates than what you've received from your current lender.
thanks
it is always better to shop around before you plan to refinance the loan. this will let you know what type of rates and terms you would receive from the other lenders. there might be lenders who can offer you lower rates than what you've received from your current lender.
thanks
I would like to refinance but I am not sure if that is a good idea
Hi Marlo!
Welcome to forums!
You need to give some details regarding your situation. Unless you do so, it's difficult to say whether or not refinancing is a good idea for you.
Sussane
Welcome to forums!
You need to give some details regarding your situation. Unless you do so, it's difficult to say whether or not refinancing is a good idea for you.
Sussane
I moved out of my home June 2009 and relocated; have 2 houses on my property, both rented now. Is refinancing still a good idea for investment property, or are the rates going to be higher?
Welcome zannas,
The rates are still quite low. If you have equity in both the properties, then you can contact your lender and apply for a refinance on your investment properties.
The rates are still quite low. If you have equity in both the properties, then you can contact your lender and apply for a refinance on your investment properties.
Hi, I have 2 brothers one lives out of state the other brother lives and co-owns house we bought last year from mothers estate gave out of state brother his share of $108,000 got mortgage at 5% $105,000 left for that amount, also took out a heloc at 5% owe $42,000 now brother wants to move out my husband and I want to buy him out give him his share for approx $108,000 how much do we refinance? and what are our options, how much will it cost?
Hi Dee!
Welcome to forums!
You will have to refinance the total mortgage that you have in the property. In order to refinance you should have at least 20% equity in the property. You should contact your lender and he will let you know the cost of refinance.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
You will have to refinance the total mortgage that you have in the property. In order to refinance you should have at least 20% equity in the property. You should contact your lender and he will let you know the cost of refinance.
Feel free to ask if you've further queries.
Sussane
I went to the bank who holds the mortgage, the amount to refinance is going to be $250,000 to cover $105,000 1st mortgage, pay off heloc $42,000, and and $108,000 to give other brother for his share of house since he is moving. I thought I can refi the $105,000 write my brother a check for difference and take out $45,000 to cover heloc and have some leftover. I thought the loan would of been $150,000 not $250,000
Jessica, My wife and I are considering refinancing to pay off debts and lower the mortgage payment. We owe about 33500 and our equity is approx. 50000. As I am 60 years old and soon to retire, we have decided to stay in our home after considering moving. An accountant freind advised me that if I stay in the same house to refinance a 30 year fixed mortgage because as I get older I'd still have to pay rent somewhere. As I do not need to leave anything to children is this a good idea. I could pay off credit cards etc. and really reduce debt. My current rate is 8.75 percent. My credit rating is 720. Any advice. Thank you
Hi Dee,
You should contact your lender and clarify the matter. You should let him know the exact amount of mortgage that you want to take out.
To bbnewk,
As you have equity in your property, you can refinance the mortgage and cash in the equity. As you're planning to stay in the property for the rest of your life, you will be able to offset the closing costs that you will be paying. So, it is a good option.
Thanks
You should contact your lender and clarify the matter. You should let him know the exact amount of mortgage that you want to take out.
To bbnewk,
As you have equity in your property, you can refinance the mortgage and cash in the equity. As you're planning to stay in the property for the rest of your life, you will be able to offset the closing costs that you will be paying. So, it is a good option.
Thanks
I have refinanced twice in the past 6 years of owning my home. The first time was to get a better rate with one mortgage company. The second was to get rid of that mortgage company and replace it with another who could do honest transactions. As the surrounding property taxes increase, so does my mortgage and I am considering refinancing again. I currently have a fixed rate loan. Could one refinance too often?