Compare Home Mortgage Refinancing Rates

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Q. Is it a good idea to refinance my mortgage loan?

Under certain circumstances, it`s a financially sound choice to go for a refinancing on line. Sometimes, such a decision doesn`t make good financial sense. Whether you should refinance or not is largely determined by your unique situation and your financial aims and priorities. For instance, you might want to decrease your mortgage rate and monthly payment, and if that`s so, you need to first clarify the following points:

• How long do you think you will continue to stay in your house?
• What is the difference between the unpaid portion of your present mortgage and the value of your property (that is, your equity)?
• Are you ready to pay points (with each point being equivalent to 1% of the face value of the mortgage) to get a smaller interest rate?
• If you do happen to get to pay lower monthly installments, will this reduction be enough to offset the settlement charges -- such as application fees, appraisal fees -- and points (i.e., if you choose to buy points)?

Q. Will it help me to refinance from a variable rate to a fixed interest rate?

As a general rule, it`s smart thinking to obtain the most affordable non-adjustable rate refinancing home loan that you qualify for, but you must take cognizance of your situation. When you`re in the first year of an ARM and you intend moving or relocating within three years, it will probably not make good financial sense to remortgage your home. On the other hand, if the rate of interest on your ARM is going to be revised and if the indications are that your mortgage rate is bound to head upward, then it may justify going in for a long-term fixed-rate mortgage, all the more so when you don`t intend to move within the next 7 years or around that timeframe.

Q. Are rates of interest higher if I negotiate a cash-out where the proceeds exceed the money required to pay out the old mortgage, freeing up cash for my personal use?

The rate of interest you pay for a cash-out refinance mortgage will normally be as much as what you pay out on a mortgage loan where you do not free up money for your personal use. You could be asked to pay an additional charge linked with a cash-out refinancing home loan, determined by the specific type of refinancing you decide on and the loan-to-value ratio. Utilizing the ownership equity in your home to square other bills could be a good decision. Look into getting some cash out in order to settle high-interest credit card bills, vehicle loans, along with any additional outstanding dues you`ve got where the interest is non-deductible. Please discuss things with your tax advisor in order to check out if you may be able to get a tax deduction on the interest on your new mortgage loan.

Q. When should I `lock in` an interest rate?

Nobody is able to know where rates are headed. But historically, mortgage rates rise quicker than they fall. Consequently, in case you plan on getting a home or a refinancing on your home mortgage, get a lock-in on your rate now -- you have the option to refinance sometime later should interest rates head downward again. Even if rates do fall in the near future, they may not be drastic enough to have much impact on your monthly mortgage payment. Of course, the perspective on this depends on each person`s unique financial and personal circumstances, therefore it is crucial to check out every alternative you have.

Q. Is it worthwhile to opt for mortgage points to get a smaller rate?

Paying mortgage points be a smart move -- or an inadvisable one --, depending on your situation. Mortgage points purchased on a mortgage loan you`ve remortgaged can be taken as tax deductibles only in minor incremental amounts -- 3.33% a year in the case of a 30-year mortgage, as a case in point. Consequently, it may be several years before your lesser rate of interest breaks even with the discount points you pay. On the other hand, if you are buying a house, points paid are a tax-deductible expense for that year. Please get professional advice from your tax consultant.

Q. Can I find lenders who offer loans with no settlement fees?

You`ll find few mortgage loans that truly don`t include closing costs. In certain circumstances, creditors may not charge application fees (the non-refundable fees paid when you apply for your mortgage) and they may also agree to pay the mortgage appraisal fee (to estimate the value of the mortgaged property) as well as the title fee (for title search, transfer, or registration of the new mortgage), although they may raise the rate of interest instead. Alternately, mortgage issuers may `roll-in` these charges into the sum total of your mortgage. Consequently, since you don`t have to pay these costs up front, this kind of borrowing is referred to as a `no closing cost` loan. While a slightly higher mortgage might be fine by you, remember that it isn`t really without interest.

Q. How much time will the process of remortgaging a property take?

Getting a refinance on line typically takes between two and four weeks, according to certain factors:

• Has a qualified professional appraised your residential property lately?
• Are you in a district that appraisers can reach without undue trouble?
• Are there several additional homes, with a similar market value to yours, within your neighborhood?
• Most often, arranging for the inspection of your house (and neighborhood review of sale prices of comparable houses) to determine value of your residential property is the phase that could delay the entire process. In an aggressive market, with refinance having many takers, it may be pretty tough to get hold of a professional appraiser. However, having all your papers in good order will help things move more quickly.

Q. What kind of figure should I be looking at as my settlement expenses?

As a general rule, you can count on having to fork out 2 percent of the cost of the property as prepaid interest to cover the intermediary period between the date you close your mortgage loan and the date you send in your initial loan monthly installment. Certain U.S. states may also insist on pre-payment of property taxes. If you`re selecting refinance morgage, however, your original home loan is almost certain to have money in an escrow account (an account set up by a lender to which the borrower makes monthly payments for such obligations as property taxes or homeowners insurance) that will provide funds to take care of such expenses. Certain people with mortgages get short-term loans while their escrow funds are re-routed to them, though most make pre-payments upfront at closure, well aware that it will be recouped whenever their escrow funds are returned.

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