subject: Refinancing Your Home Loan [print this page] This is a question many homeowners may have when they are considering re-financing their home. Unfortunately the answer to this question is a rather complex one and the answer is not always the same. There are some standard situations where a homeowner might investigate the possibility of re-financing. These situations include when interest rates drop, when the homeowner's credit score improves and when the homeowner has a significant change in their financial situation. While a re-finance may not necessarily be warranted in all of these situations, it is certainly worth at least investigating.
Any homeowner that is considering refinancing their home can only make a good decision if they have researched all of the options available. While it is a good idea to ask friends and family for general advice and information about refinancing, just because a solution worked for them does not means it's a good one in every other circumstance. Each situation needs to be assessed individually, however the types of loans to consider will generally be the same.
Although ARMs are considered somewhat risky there is usually a certain degree of protection written into the loan agreement. This may come in the form of a clause which limits the amount the interest rate can increase, in terms of percentage points, over a fixed period of time. This can protect the homeowner from sharp increases in the interest rates which would otherwise considerably raise the amount of their monthly payments.
Homeowners also need to carefully consider what lender they wish to work with. Not all lenders will be willing to offer the same kind of loans, with the same terms, and with the same interest rates. It is vital that homeowners get quotes from all of the lenders they are considering to get an idea of what each lender is willing to give them. It is a very good idea to get these quotes with a few days and no more since interest rates can change without notice. What may be available today is not guaranteed to be available tomorrow.
Customer service is another important aspect of choosing a refinance lending. Is the lender willing to answer questions honestly and thoroughly? Does the lender seem to care about what their customers need? Are they responding to any calls or emails in a timely manner? All of the answers to these questions should be yes. This will help a homeowner make a decision about a lender they can trust to make the refinance process less stressful.
Considering the fees associated with refinancing will also help a homeowner make a good decision. Some of the high costs of refinancing are the same closing costs as with the original mortgage. Application fees, appraisals, property taxes, and miscellaneous lender fees will all have to be paid again with a refinance. If this turns out to be a financial problem for the homeowner they should reconsider refinancing.
Finally a homeowner should determine if the hassle and stress of a refinance is worth it. It is a lot of work, time, and stress. Between researching and contacting lenders that can eat up hours of time. Homeowners need to be sure the savings is worth investing that time.
