Posted on: 13th Sep, 2004 01:01 am
Refinancing is a good option that can help you to get rid of high interest debts. But you can only benefit from it if you can secure a lower rate on your loan and also make minimum payments to the lender. You can try shopping for some of the best rates and costs while you are into refinancing. Besides, an awareness of the entire loan process also helps you get through the deal easily. This article contains an overview of the refinance process in simple steps so that it will be easier for you to interpret what the process is all about.
Steps to follow:
- Decide how long you are going to stay in the property.
- Contact your first lender and find out what he has to offer. Otherwise start shopping with other lenders.
- Get pre-qualified for the loan
- Decide upon the type of mortgage
- Check out the factors that may influence the interest rate on your loan. These are:
- Your credit score.
- Loan amount.
- Number of points paid.
- Lock-in-rate.
- Compare the interest rate on offer with that of your existing loan.
- Get pre-approved with a lender.
- Calculate the monthly loan payments
- Subtract new payments from current monthly payments. The difference gives you the savings that you can earn by getting a low rate.
- Divide the monthly savings by the total closing costs. That gives you the number of months within which you can recover the closing costs. This time period is known as the Break-even period.
- Compare the months obtained with the time period you're staying in the house. If it exceeds the time period, then refinancing may be a good choice.
- Follow the simple steps that will take you to loan closing, that is, towards finalizing the deal.
- At closing time you'll have to sign the loan documents and the mortgage note. Besides, you will have to pay for the closing costs and prepayment penalty.
Related Readings
We just bought our house last Oct, our interst rate is 6%, and we got financed through VA loan. I see that the interest rates are low and I have been getting a lot of mails stating that I can avail of the low interest rates through financing loan. I am not sure how it works or whether we are eligible for it since we just bought our house. We are on fixed 30 year mortgage are paying $1800/mo. I would love to have a lower monthly payment but does not have enough knowledge on how to do it.
Appreciate all the advise I can get.
Thanks.
Appreciate all the advise I can get.
Thanks.
24mburnett, your biggest struggle in trying this will be equity in your home, i suspect. you don't say where you are located, but virtually everyone in this country has lost value in their homes. you also didn't say how much of a down payment you had - va loans allow 100% financing, of course. if you borrowed 100% of the purchase price, you probably won't be in a position to do anything.
even if that's the case, don't fret too much, because 6% really isn't a bad interest rate; it's just higher than the 5's that are being offered now. monthly, the difference in payments would be negligible, i think.
it's worth thinking about, so you would want to drag out your paperwork and do some math with a loan officer to see if it makes sense. see how long it will take you to make back whatever expenses you would have based on the savings to see if it's worth your trouble.
honestly, my gut reaction is that you're not going to benefit from doing a refinance at this time.
even if that's the case, don't fret too much, because 6% really isn't a bad interest rate; it's just higher than the 5's that are being offered now. monthly, the difference in payments would be negligible, i think.
it's worth thinking about, so you would want to drag out your paperwork and do some math with a loan officer to see if it makes sense. see how long it will take you to make back whatever expenses you would have based on the savings to see if it's worth your trouble.
honestly, my gut reaction is that you're not going to benefit from doing a refinance at this time.
how does one get a refinance loan on a property obtained with a quit claim deed?
The home is located in minnesota. The person I'm getting it from owes 77000. I was told that once I recieve the quit claim deed the bank holoding the note would most likely ask for the balance owed on the property.
that is correct sonny...there is undoubtedly a due on sale clause on the existing mortgage. you'll need to find a lender willing to allow you to mortgage the property and pay off the existing mortgage.
I am a single mom and I'm having trouble making payments. Is there a loan that will help me refiance based on my income.?
Hi kak!
Welcome to forums!
Whether you will be able to refinance the property or not will depend upon whether you have equity in the property or not. If you are current on your mortgage payments, you can contact your lender and check out if he is ready to refinance the property.
Feel free to ask if you have further queries.
Sussane
Welcome to forums!
Whether you will be able to refinance the property or not will depend upon whether you have equity in the property or not. If you are current on your mortgage payments, you can contact your lender and check out if he is ready to refinance the property.
Feel free to ask if you have further queries.
Sussane
how long do you have to wait to refinance?
be more specific, please, kwhit
If you mean how long after you've closed on a prior refinance, you'll have to refer to the loan terms of your current mortgage. It can vary from right away to 30 or 60 days. Some even longer. Many banks who do a ton of mortgage loans have no stipulations in this area, but some smaller lenders may have longer periods. Best to call the broker you went through the first time for an accurate answer...
I am a widow. I owe about $106,000 on my present mortgage. My interest rate is 7.25 per cent. I have about 10 years left on the mortgage. Since my income is now lower, I would like to get a lower rate of interest.
I purchased my home in March,2008. My current rate is 5.75 on a fixed 30 year note. I am 69 years old. Should I consider refinancing?
To Centerport: your biggest issue in refinancing is calcualting the cost of a reduced rate and how long it will take you to recover the money spent based on the amount saved. Since you'll be paid in full in 10 years, it may not make sense; but it's definitely worth investigating.
To Carol: with a rate of 5.75% now, you'll probably have to pay a substantial amount to drop the rate by 1 per cent or so. However, if you plan to be in this home for the long run, it would likely be worth your trouble. again, the calculation of how long it takes to make up your costs based on the savings applies.
To Alan Jacobson: the existing mortgage lender has no say in the matter (unless there is a penalty for early payment). Secondary market guidelines are specific these days as to length of ownership prior to a refinance.
To Carol: with a rate of 5.75% now, you'll probably have to pay a substantial amount to drop the rate by 1 per cent or so. However, if you plan to be in this home for the long run, it would likely be worth your trouble. again, the calculation of how long it takes to make up your costs based on the savings applies.
To Alan Jacobson: the existing mortgage lender has no say in the matter (unless there is a penalty for early payment). Secondary market guidelines are specific these days as to length of ownership prior to a refinance.
i have a remanufactured home that i purchased in 2004 and the land that i already owned is part of my mortgage. i am paying 9% interest on this loan. my mortgage company says that is a low rate. I don't understand that when people are buying homes and getting under 5% interest. Where can i go to get my interest rate lowered?
Hi geoshaft
You can refinance the mortgage with any other lender. You can speak to the other lenders and check out the type of rates and terms they are offering you. This will give you an idea whether you would be able to refinance the loan or not. You can also speak to the lenders of this community and seek a no obligation free mortgage quote. This will help you in knowing what type of rates and terms you may receive.
Thanks.
You can refinance the mortgage with any other lender. You can speak to the other lenders and check out the type of rates and terms they are offering you. This will give you an idea whether you would be able to refinance the loan or not. You can also speak to the lenders of this community and seek a no obligation free mortgage quote. This will help you in knowing what type of rates and terms you may receive.
Thanks.