|
By Carrie Reeder
Refinancing your home mortgage can come with some great perks.
If you do it with no money out of pocket, you can skip one to
three mortgage payments. You can save money on your payment or
pay off your entire mortgage faster when you have better
terms.
Here are a few things to pay attention to when you refinance
your mortgage loan, to make sure that you don’t overlook
anything that you might regret, or that can cause you problems
later:
1. Apply for a pre-approval to many different lenders to make
sure you are getting the lowest rate possible. When you do
this, make sure that with the initial pre-approval
application,
the lender is not pulling your credit history. You will want
to
reserve your credit pull for the lender that you are most
likely to work with. You can decide that after you have gone
through the preliminary pre-approval process with a few
lenders. Each time your credit is pulled, it docks your credit
score just a little. If you have too many inquiries, it could
keep you from refinancing your mortgage loan with the lowest
rate possible. When you pre-apply for home mortgage loans
online, most lenders or mortgage service companies will not
initially pull your credit. Check for information about this
on
their website. They will usually tell you whether or not they
are going to pull your credit. Also, if on the application you
do not give them your social security number, they cannot pull
your credit. If, on the application, they ask you to describe
your credit, they are probably not pulling your credit.
2. Make sure that your original mortgage does not have a
pre-payment penalty or early payoff penalty of any kind.
Sometimes people will get into their mortgage with the
mortgage
having a pre-payment penalty and they will not even know about
it. Pre-payment penalties usually range from 6 months to 3
years with a penalty for an early payoff. The penalty is
usually about the amount of 6 months worth of your mortgage
loan interest, but this varies. You would have to be able to
have some significant payment and interest savings on your
refinance loan to justify refinancing a mortgage loan with a
pre-payment penalty.
3. When evaluating different lender offers, in the mortgage
loan pre-approval process, pay closest attention to the
interest rates they are offering & the closing costs. These
are
the two biggest factors that will help you figure out which
lender is right for you. If one of these two factors is too
high, it could offset the benefit of refinancing for you.
4. Get your interest rate and closing costs in writing as soon
as you decide on a lender to work with. Get your lender to
give
you a commitment in advance of all of the costs that will be
involved with your loan. Find out if the refinance loan you
are
getting has a pre-payment penalty as well. Sometimes lenders
will leave out important information like this, if they think
it might scare you away from refinancing with them.
About The Author: To see a list of recommended refinance loan
companies online, visit this page:
www.abcloanguide.com/refinance.shtml - Carrie Reeder is
the owner of ABC Loan Guide, an informational website with
articles and more about various types of loans.
|