Evaluating Mortgage Refinance – Follow These Rules!
Updated: Sep 10, 2020
When faced with the question about refinancing a mortgage one needs to be prudent and ask themselves a few questions. Mortgage Refinance often calls for extra spending on various factors such as closing costs, monthly payments, new loan terms etc. But if you are having trouble paying up your mortgage, Mortgage Refinance may help lower the burden, provided you go by a set of rules.
Shop Around For Favourable Terms
When opting for Mortgage Refinance don’t rush into things. Weigh the many options available to you and take up Mortgage Refinancing only if you are offered a lower interest rate. While you are at it, also look for banks offering better mortgage terms that best suit your current financial situation. If you reach a deal you want to sign, ensure the papers have the same rate of interest and loan terms as told to you earlier. The thing to note here is that though interest rates may be variable, you could still ask for better terms.
What To Look At in Loan Lengths
While refinancing your mortgage ensure you do not lengthen your loan. This is because a longer term of loan means a bigger dent in your pocket as you end up paying more interest. For example: When refinancing to a thirty-year loan, you may end up increasing the length of your loan and paying more interest even though it will decrease your monthly payment. So refinancing to a fifteen-year mortgage is a more viable financial option if your finances are in place as this also means an increase in your monthly payments vis-à-vis a thirty-year loan. Still not convinced? We suggest you do the math and see how much you will save with a shorter loan length.
Make Your Home Your Priority
Many people who refinance a mortgage opt to withdraw equity from their home to use towards paying off debts, pay for their wedding, education, or even for home improvements. Be mindful, that in withdrawing equity from the home, you are lengthening your loan and will have to pay more interest in the long run. This situation also puts your home and your future at a risk in case you are not able to make payments towards your mortgage.
The Fine Print
Besides, do read the fine print, at least three times before signing the papers. You should know what will befall you in case of a delayed payment as different lenders levy penalties of different kinds such as late fees. You should also be aware of what circumstances can your home go to foreclosure. Besides, you must have knowledge about prepayment penalties too. It is always good to have complete knowledge of what you are getting into.
And lastly do remember to look for a package from lenders other than your regular lender. Even though rates may be at an all-time low, they may differ from lender to lender. When considering mortgage refinancing, always remember LendX Financial is just a phone call away to help and guide you at every step!