Mortgage Refinancing

Mortgage RefinancingThe current economic uncertainty and projected outlook leaves many homeowners with mounting concerns as to how best to juggle an already over-burdened budget and the constant influx of mounting bills. Without fail, the question soon emerges whether or not the struggling homeowner can conceivably reduce their monthly mortgage payment through a refinancing option. A popular question always seems to be “Should I Refinance My Mortgage?”. Fortunately, there are a few methods and helpful solutions to provide the answers they need to accomplish this without having to deal with any unwarranted or unnecessary risks involved when setting up a well-planned strategy.

Why Choose Refinancing?

Mortgage refinancing will not only provide the homeowner with a means to achieve lower monthly payments, but with some careful and objective planning and research, there is also a good prospect that they might acquire far better repayment terms which would allow a much faster mortgage loan pay-off in the end. The strategy is obviously to investigate exactly which terms and mortgage interest rates would best satisfy the homeowners budgetary requirements – getting those monthly payments lowered, and at the most competitive rates possible.

Preliminary Strategy

One very effective preliminary strategy is to seek and apply for a pre-approval status with numerous mortgage refinancing companies or banking institutions. This ‘shopping around’ method ensures that the homeowner gains full and complete knowledge regarding the trends and pricing options available within the current refinancing market. However, it is not only wise but an advisable tactic when doing this to keep the prospective lenders from acquiring any credit background by ‘pulling’ the credit history information from the reporting bureaus. Since the objective is to end up with the lowest interest rates possible, each credit inquiry will have a negative effect on the credit status as a result. Therefore, it is in the homeowner’s best interest to wait until they have decided upon the most beneficial lending source and pricing before allowing any credit inquiries to be made in order to get the best refinancing deal with the lowest rate.

The next objective is to investigate whether or not the homeowner’s existing mortgage contract does not include any pre-payment clauses that would initiate any penalties or fees for paying early. Usually homeowners have indeed previously opted for these types of mortgage clauses, and while the amounts may vary depending on the previous lender’s contract stipulations, the penalty can easily represent as much as six months worth of mortgage interest. Therefore, close and cautious evaluation is required if paying these penalties can indeed be covered during the refinancing process.

When the refinancing process is being scrutinized, the homeowner needs to pay strict and close attention to not only the interest rates, but to all of the associated closing costs as well. It is the total package of the refinancing strategy that decides whether or not the plan is going to work to the borrower’s best budgetary advantage. While the lender will certainly wish to gain their long-term mortgage commitment via a lower monthly payment, the borrower must still evaluate the effect of the interest rate offered , as well as a detailed outline of all closing costs involved with the new mortgage contract before reaching a final refinancing decision.

mortgage refinancing decisionFinally, because the mortgage refinancing decision is not one best made in the heat of the moment, it is a wise policy to collect all relevant information provided by the prospective lender in a written and detailed form. Each and every aspect of the mortgage refinancing contract negotiations should be spelled out clearly and concisely – the repayment terms, the interest rates, and the closing costs – the total package, including any possible pre-payment penalties or fees should they play a part in this new mortgage. With this written commitment of refinancing criteria agreed to by the lender, there will be no hidden or unstated costs or agenda, nor any surprises when it comes time for closing the refinancing deal. This final strategy will ensure the borrower can take the time necessary to reflect upon the overall decision, and to make certain it is the best plan or option available to them before signing on the dotted line.