You can refinance your home as many times as you like, but too much refinancing can really burn a hole in your pocket. Lenders usually levy burdensome prepayment penalties and closing costs whenever you refinance too quickly. Here’s a brief guide to refinancing.
Many people turn to refinancing as a way to reduce the burden of their monthly mortgage premiums. Refinancing can help you extend your mortgage term and lower those payments.
But, be careful. Sometimes, lenders will end up charging you endless fees, and some might even hike up rates after a probationary period. This is why you need to read the fine print before refinancing.
Some homeowners are choosing to refinance as a way to consolidate debt. It’s true, refinancing your home can help you pay off large debt if you’re swimming in deficits. It’s also a good way to tap into home equity, provided you can find a way to negotiate with your lender.
Only Refinance If Absolutely Necessary
There are many dangers to mortgage refinancing, and it’s important as a borrower to educate yourself before you get involved in refinancing.
First of all, remember that most refinancing deals will include prepayment penalties or early cancellation fees. These fees apply to the vast majority of mortgages. If you are refinancing your home, be sure you are totally aware of any hidden fees you might have to pay.
Also, make sure you will pay a fixed interest rate on your mortgage after you refinance. Don’t get stuck with an adjustable rate on your refinanced home. Otherwise, you will end up paying more than you ever anticipated.
Negotiate With Your Lender
Work with lenders to see if you can pay down more principal and thereby ease the financial burden before you refinance. Also, don’t count on Fed rates as indicators of interest rates.
The Fed’s interest hikes and cuts only immediately affect short term loans. Homes are long term loans, so these interest manipulations take longer to manifest.
You should be very discriminating when you are selecting a mortgage broker. Check on every broker’s credentials, and ensure that they are registered with the state and fully licensed. Every state has strict requirements that lenders must follow in order to obtain a license.
There are a multitude of different types of mortgage loans. You can choose from a veritable menu at your local broker. Don’t be overwhelmed by all of these loans. Rather, take time to carefully analyze them so that you fully understand what you’re getting into.
Compare rates at a variety of different brokers. You may want to consider going to a broker that specializes in refinancing if you’re considering reworking your mortgage. Listen carefully to word of mouth, and trust your friends. If you know of someone who has had a good experience with a lender, then investigate that lender.
There are many ways you can accomplish a thorough refinance of your home. Pay close attention to the fine print so that you can lower those payments and get a better interest rate on your mortgage. It’s smart to be choosy when you’re considering refinancing your home.