Best Mortgage Refinancing Rate
Get the Best Mortgage Refinancing Rate
In order for you to get the best mortgage refinancing rate available to you, you will have to do a little research and a little math. Because it costs money out of pocket to refinance, it is only beneficial to you if you plan on staying in your home long enough to make up the difference between your refinancing costs and your interest savings. If your loan has a pre-payment penalty, make sure your savings will more than cover the cost of the penalty. Some penalties may be high enough to prohibit refinancing entirely.
Most "no-cost" refinancing options have higher interest rates than similar loans that do require closing costs. Some "no-cost" lenders offer rebates on points to help counteract the higher interest rate and cover some of the fees not covered by the lender. It is always best to make sure that you understand your refinancing paperwork as there may be other fees that you are still your responsibility.
The higher interest rate on a "no-cost" refinance can be the best mortgage-refinancing rate if you plan to sell your home in a few years and have an interest rate above the current market rate for a "no-cost" refinance. If are able to make the payment up front and plan on living in your homes for more than a few years, you will probably want to seek a
lower interest rate.
Refinance With Your Lender
The best time to refinance with your current lender is after you shop around. Your current lender may be in the position to offer you a better deal than a new lender, but because they are content with your high interest rate, they will not immediately try to help you unless there is a threat that you may obtain a new loan. By shopping around you will know what your other options are before you approach your current lender; if they are not able to offer the best overall deal you can always go with another lender.
Why Are You Refinancing?
When deciding the best mortgage-refinancing rate for you, it is always important to examine why you are refinancing. If you are refinancing to get a better interest rate on your loan and you still have a substantial balance, refinancing with a term that is close to or shorter than
your current term will save you the most money over time. If you simply need to reduce your monthly payments, then refinance with the best interest rate and monthly payment breakdown you can get. Unfortunately, this arrangement usually comes with a longer repayment term and may lead you to pay a higher total interest overall. If you would like to take cash out for home improvements or debt consolidation look at both a home equity loan and refinancing before you decide to refinance. If you have an adjustable rate mortgage (ARM) and would like to lock in your rate, shop your options and then talk to your current lender. Your current lender may be able to offer you a better overall plan.
Remember, any lender wants you to take the deal that nets them the most profit, so it is always best to consult a financial advisor or a neutral third party before you make your final decision.