Should You Refinance Your Mortgage?

If you can refinance your mortgage, it could be a great way to save yourself a great deal of money. Are you thinking about doing this? Spend some time researching the subject and you may find yourself on your way to lower rates and better terms than you currently have on your mortgage loan. The research may take some time and effort, but it will cost you nothing and the benefits could cut costs and save you thousands of dollars in the long run.

Before you run off to the mortgage bank, let’s see how it works. Here's an example of a reduction in the interest on your mortgage:
Your Mortgage: $200,000 over 30 years
Interest: $290,000 @ 7.25%
New Interest Rate: $267,000 @ 6.25%
Saving over 30 years: $23,000

This is what you have to do: Check if there a prepayment penalty on your current mortgage. Get several rate quotes from a range of mortgage lenders. You will need to supply basic information about your debt, income and assets, so that they can offer the best mortgage loan package tailored to suit you. Below is a list of the information you should obtain from these lenders in regards to your new mortgage:
1. Length of the new loan.
2. New monthly repayments.
3. New interest rate.
4. Extra fees for setting up the new loan.
5. How much you will save over the term of your loan.

Many mortgage lenders will be more than happy to do a full analysis of the new mortgage versus your existing mortgage.

Search for the best packages, compare and evaluate interest rates, closing costs, processing fees and extra charges. By having full knowledge of the lowest total costs available for refinancing, you gain an advantage to use leverage for negotiating the lowest rates and fees possible. Ask all your questions and watch for hidden charges such as loan review fees, etc.

Investigate options such as a Loan Modification. If you don't want to change the term of your loan and are only looking for a lower interest rate, this can be a very quick and cost effective way to go. In a Loan Modification your current lender will agree to lower your interest rate for the remainder of the term of your loan. This can be a great alternative if your lender offers this facility and generally costs less than $500.