New Year and New Loan: It Might be Time to Refinance

Friday, February 1, 2013 - 4:07pm

The New Year brings with it challenges and opportunities. As new budgets and new plans come together, this may be the appropriate time consider refinancing your current mortgage. For most homeowners, this process involves ensuring a clear understanding of your current mortgage, learning what new options are available, and enlisting the support of competent help to work through the entire process. With the right execution of these tasks, as a savvy borrower, you can save more money this year and lock-in your rates to ensure financial solvency for years to come.

• Ensure a comprehensive understanding of the present mortgage

Understanding a home mortgage is more than just making a payment every month or remembering the interest rate. In order to get a full picture of actual money spent, a homeowner should know a number of simple, yet very meaningful details regarding they’re mortgage. These include the original price of the loan; the present interest rate; when/if that rate will change, and to what; how much the interest costs will be; and finally what the total cost of the mortgage will be when it is paid off in full. While this was important when selecting the initial lone, it is also important information to refresh when looking to refinance.

• Compare present mortgage to available options

Today there are a variety of mortgage options available to many home owners for refinancing, and comparing them to an existing mortgage in these areas is key to understanding how this will affect household finances. Today there are both fixed and variable rate mortgages of different durations. These different products will not only alter the amount due per month, but also the amount paid over the lifetime of the mortgage. These types of long and short term considerations reflect different household priorities. For example, while longer term mortgages generally decrease the monthly payment, they do increase the amount paid over the life of the loan.

• Today’s low rates present a unique opportunity

Today many mortgage rates continue to rest at historic lows. Both fixed and adjustable mortgage rates could be available at between 2.5% and 3%. A homeowner who qualifies for refinancing to this level can not only decrease their monthly payments, but also decrease the amount paid in total when the mortgage is completely repaid. The first step to achieving these savings is identifying whether or not you qualify for refinancing. If so, it is in your interest to accept and lock-in your rates quickly, to maximize savings.

• Learn how to qualify and refinance with a trusted professional

To different homeowners, these considerations may seem transparent, daunting, or somewhere in between. In order to best maximize these benefits, the first step is enlisting the support of a trained professional, who can quickly and expertly identify the best refinancing options, and then walk you step-by-step through the process so you can lock-in your rates. This way, the easy considerations will be maximized, and the tougher ones won’t get overlooked.   

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