Whether To Refinance Your Mortgage or Not

Finding a better deal on your mortgage is certainly possible when so many lenders want to lend you money. If you have an adjustable rate mortgage and you don't want to be trapped when the fixed rate portion expires, then you may already be in the market to get a new mortgage. Here are some tips that will help you to know if refinancing your mortgage is a good idea.

Watch the Interest Rates

One main indicator that will tell you that it is a good time is when the mortgage interest rates are one percent or more (preferably more) lower than what you have now. If you believe that the market could very well go more than 1% difference, then you may want to wait until it gets there, and then apply, otherwise, go for the 1%.

Determine How Long You Will Stay Where You Are

It is best if you are going to stay there for a number of years to come. Refinancing costs in closing fees and all the other things that apply to mortgages - typically somewhere between 3 to 6% of the amount to be refinanced. This means it will take you a couple of years to recover from the cost. If you are not planning on staying long, then it probably will not be worth refinancing.

Choose a Mortgage That You Can Stick With

Many mortgages out there have some fancy gimmickry and promises in order to get people's attention. Make sure you understand the various terms about mortgages and do your own research into what is good and what is not. In a time of financial instability - whether your own or that of the country - an adjustable rate mortgage is always the greater risk. If you get one, be sure that you have a guarantee of convertibility, if you should choose to refinance with the same mortgage company.

Use Refinancing Calculators

Many websites that provide information about refinancing and mortgages have calculators that allow you to determine beforehand what your payments and savings will be each month and year. Be sure to shop around some and get a number of offers before you buy. This will give you further savings and help you to enjoy even more your new mortgage package.

Comments

[bally]

I rather think that people should find the right sourcing partner. I don't believe that the man in the street is equiped with skills to find and contact all the lenders.

I would outsource the task of finding lenders to a broker.. However, a lot of them will not be able to give you service simply because they don't possess the skills. So, you should be careful in choosing the right broker..

I speak with a lot of brokers and lenders and quite honestly a lot of them just don't have what it takes.. For example, in a recent meeting with a well known and well established broker I was told me that he could get finance for a small project at a rate around 3 to 4% above base... I literally fell off my chair.. I could not believe what I was hearing.. This is a classic example of someone who does not have my interest at heart..

Another broker wanted a fee of 1.5% for a simple re-mortgage task. There would additional fees charged by the lender over and above his fees he informed me... I could not stop laughing... In a nutshell, I was being asked to pay 3% of the loan value in fees... so for a £200k mortgage I was being asked to pay £6,000 in arrangement fees alone..

I told him where to get off.. but people will try so be careful...