You have probably heard or read a lot about home mortgage refinancing lately. It is something that gets a lot of press on TV, in newspapers, and on the Internet especially when mortgage interest rates take a dive. Mortgage refinancing is essentially the act of paying off your existing mortgage using the cash from a new mortgage. Usually, the new mortgage is secured at a lower interest rate than the existing mortgage. This is what makes the refinance worthwhile to do: the promise of lower monthly payments, lower total cost of the loan, or both.
How Refinancing Works?
If you are wondering, How does refinancing work? , here are 3 frequently asked questions about home mortgage refinancing:
Question 1. When should I refinance?
Answer: The best time to refinance is when your situation meets any or all of the following conditions:
a. you notice that average mortgage interest rates advertised by banks have dropped much lower that they were when you signed your current mortgage.
b. your current mortgage is an ARM (adjustable rate mortgage) whose fixed rate is about to expire, thereby switching to a variable rate that may be higher than your fixed rate.
c. you have equity in your home that you would like to liquidate (i.e., turn into cash).
d. you would like to shorten the repayment terms of your loan in order to pay it back more quickly, thereby reducing the total cost of your loan*
* note that in this last case, most people with an existing mortgage always have the option of prepaying their mortgage balance down faster with no prepayment penalties. However, most people find it easier to make higher payments when they are actually being invoiced each month for those higher payments by their lenders, rather than just writing larger checks. Still, most people interested in d above will only do so if they can also get a better interest rate for their refinance mortgage than they have on their existing home loan.
Question 2. Who can refinance?
Answer: Anybody with an existing home mortgage may refinance at any time. If the home s title is in the name of more than one person (say, a husband and wife), both must be present during the refinancing process.
Question 3. How do I get started with my refinance?
Answer: Refinancing starts with your keeping an eye on interest rates. When you see them dip at least 0.5 below the rate you are currently paying on your existing mortgage, that is the time to start seriously considering refinancing.
Then, follow these steps to get the ball rolling:
1. Create a list of at least 5 refinance lenders. It is always a good idea to ask for a refinancing offer from your existing lender, but don t stop there: you have no legal obligation to refinance with your existing lender. Rather, your are highly encouraged apply to multiple lenders to increase your chances of getting the best possible rate.
2. Keep careful track of the contact details for each lender. Use a spreadsheet application or pen and paper this is not the time to skimp on taking excellent notes!
3. For each offer you get, be sure to always go back to the lender to see if they can do better. It does not hurt to ask, and you may be surprised by a better offer. Be sure to keep track of any points (commissions) being charged, in addition to the interest rates each lender offers you. These frequently asked questions (and their answers) can help you understand how refinancing works and how to get started in the process.
Author Resource:-
Get more tips on home mortgage refinancing at the best-possible interest rates at: http://www.home-mortgage-refinance-loans.com Home Mortgage Refinancing Tips.
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