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Mortgage Rates - United Lending Partners
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Mortgage companies offer a refinancing option wherein you can apply for a new loan, giving you the opportunity to start over. When you refinance, you can forget about your old mortgage and instead adjust your monthly payments according to the terms of the new loan. Prior to teh housing crisis, refinancing has been a virtual cash source for banks but the landscape changed when the Federal Reserve intervened and the rates dropped in 2009. With the opportunities to earn profits from refi loans taken away from them, banks might become more relaxed and offer the best home loan rates possible.
When should you refinance?
Generally, you apply for a refi when you need to lower interest rates or monthly payments, convert your mortgage from adjustable to fixed rates, or shorten the term of your loans. It doesn’t even matter if you had just applied for a new mortgage, as long as you think that refinancing will save you money in the long term. So if you plan on making your house as your retirement home, you should consider refi loans from mortgage companies. If you plan to move out or reselling in less than five years, then you should are likely better off steering clear from refinancing.
You should try out a mortgage calculator to find out the cost of refinancing, which will eat up around 2-3 percent of the total loan amount. Then you should compute your break-even point (which is simply dividing the mortgage fees by your monthly savings), to know how many months you still need to go before you “break even.”
Lesser years, the better
Generally, the rule of thumb is the number of years you are going to pay your mortgage will impact on the total loan terms. That means, you can get the best home loan rates when the payment duration is short. While you will pay higher monthly rates, other costs such as insurance and interest will be advantageous for you. So if you don’t plan on paying cash, it’s better to get a 15-year loan.
How can you qualify?
After the property crash, the rules have become more stringent. Right now, mortgage companies will ask from you a high credit score and a significant equity in your house. You are more likely to get refinancing if the equity in your home will be around 10-20% or more, as well as savings. You will pay the difference when the amount you borrowed is greater than the amount owed.
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