When considering refinancing your mortgage, it literally pays to be smart. Clearly, the more information that you can gather concerning your options, the better position you’ll be in to make good financial decisions. Keep these points in mind when shopping for refinancing; they could very easily save you thousands.
* Remember, the lowest interest rate offered is not necessarily the best deal. Many lenders will offer a very low rate to get you in the door, only to charge you several points on top of the loan. A point is a fee equal to one percent of the loan. A one-point fee on a $150,000 loan would be equal to $1,500; a two-point fee would be $3,000.
* Remember, closing costs can vary with different lenders. Closing costs typically include things such as credit report fees, title company search and insurance fees, loan origination fees, appraisal fees and documentation fees among others. Lenders are bound by law to provide you with a Good Faith Estimate of closing costs within three days of taking your loan application. Your actual costs may vary slightly because the lender does not always know what the exact cost of a certain fee will be from a third-party provider. And different lenders themselves can charge different rates for their loan services. Also keep in mind that some lenders may advertise “no closing costs” on their refinance loans. The lender may pay the closing costs for you, and then recoup those fees (and then some) by charging you a higher interest rate on the loan.
* Remember, there may be other fees involved when you refinance. For example, some lenders may require that you keep an amount equal to 12 months of property tax in escrow. Others may require six months worth of funds to be held; other lenders might not require any escrow money at all. While you’re at it, ask if your homeowners insurance will be paid by you directly or if the lender will require an escrow account for that as well.
* Remember, an online bank might give you your best loan deal. Online banks may have lower overhead costs and more streamlined account and loan processes, and pass those savings on to their customers in the form of more attractive loan and earnings rates. Doing your research online can turn up some very competitive loan rates. But remember; check out any online bank that you are considering with the Federal Deposit Insurance Corporation (FDIC). This is actually a good idea to do for all banks that you have any dealings with.
* Remember, get everything in writing and pay attention to deadlines. For example, if you are quoted a specific interest rate, make sure that it’s given to you in writing. Be aware, however, that interest rates are only guaranteed, or locked in, for a short period of time, usually thirty days. If rates go up during that lock-in period you‘ll still keep your guaranteed rate. If rates go down during that time, most lenders will automatically give you the lower rate, although they are not legally obligated to do so.
Source
Monday, June 29, 2009
Monday, June 22, 2009
Remortgaging to free up cash
If the value of your home has risen significantly since you took out your mortgage – and, frankly, whose hasn’t over the past few years – you might be tempted to remortgage to free up some of that cash.
You could clear credit card or personal loan debts – or enjoy spending it on home improvements, a new car or a fabulous holiday.
With so many mortgage lenders competing for business, provided you’re up-to-date with your repayments and your financial situation hasn’t deteriorated markedly, you should have no difficulty finding one willing to offer you a larger loan.
Chances are you will even be able to get it at a lower interest rate than you are paying now.
If you have a particularly good deal with your existing lender, and it’s keen to keep your business, you might simply be able to increase your current loan, avoiding the hassle and cost of remortgaging.
But however you go about it, the end result is that you will owe more, so think very carefully before committing yourself.
To help you decide if it really is worth increasing your mortgage, read The dangers of remortgaging to free up cash.
Source
You could clear credit card or personal loan debts – or enjoy spending it on home improvements, a new car or a fabulous holiday.
With so many mortgage lenders competing for business, provided you’re up-to-date with your repayments and your financial situation hasn’t deteriorated markedly, you should have no difficulty finding one willing to offer you a larger loan.
Chances are you will even be able to get it at a lower interest rate than you are paying now.
If you have a particularly good deal with your existing lender, and it’s keen to keep your business, you might simply be able to increase your current loan, avoiding the hassle and cost of remortgaging.
But however you go about it, the end result is that you will owe more, so think very carefully before committing yourself.
To help you decide if it really is worth increasing your mortgage, read The dangers of remortgaging to free up cash.
Source
Monday, June 15, 2009
Why remortgage?
The simple reason is because it will save you an absolute fortune. Cutting 1% off a £100,000 mortgage will cut your costs by around £80 a month. Remortgaging is the biggest single money-saving activity possible, the financial equivalent of liposuction. Take the plunge and the pounds will slip off straight away.
The reason for a printed guide is because remortgaging is just too large a subject for an online version. It's something you need to sit down, read through and take some time over. After all a mortgage is likely to be your biggest single expense and therefore getting the remortgage right offers the biggest single savings.
Does the credit crunch change anything?
The guide was printed before the Credit CrunchThe Credit Crunch
This is the name given to the current phenomena that banks and other big financial institutions are struggling to find money to borrow. As they can’t find money to borrow they’ve less to lend out, which means the cost of debt is increasing, and its availability is decreasing. In other words it’s getting more difficult and more expensive to borrow.
Close , all the information in it holds true though. The main difference is that where once mortgage companies were fighting for business; now many don’t want it. It’s tougher to get a new mortgage deal and tougher still to get a very cheap one. This makes it even more important that you follow through the guide to understand how mortgage deals work before trying to find the right one for you.
Source
The reason for a printed guide is because remortgaging is just too large a subject for an online version. It's something you need to sit down, read through and take some time over. After all a mortgage is likely to be your biggest single expense and therefore getting the remortgage right offers the biggest single savings.
Does the credit crunch change anything?
The guide was printed before the Credit CrunchThe Credit Crunch
This is the name given to the current phenomena that banks and other big financial institutions are struggling to find money to borrow. As they can’t find money to borrow they’ve less to lend out, which means the cost of debt is increasing, and its availability is decreasing. In other words it’s getting more difficult and more expensive to borrow.
Close , all the information in it holds true though. The main difference is that where once mortgage companies were fighting for business; now many don’t want it. It’s tougher to get a new mortgage deal and tougher still to get a very cheap one. This makes it even more important that you follow through the guide to understand how mortgage deals work before trying to find the right one for you.
Source
Monday, June 8, 2009
Q&A: Moving your mortgage
Thousands of people switch mortgage provider each year, some to save money, others as a means to borrow more cash.
What factors should you bear in mind when switching mortgage providers.
Can remortgaging really save money?
It depends.
It is estimated that more than half of all borrowers are continuing to pay over the odds for their mortgage each month.
Usually these people are paying the lender's standard variable mortgage rate. There will be lower rates available from other providers.
But this is not the whole story.
In recent years, banks and building societies have been hiking mortgage fees to subsidise attractive headline interest rates.
So called mortgage arrangement fees have sky-rocketed as have charges for redeeming a mortgage.
As a result, you have to do the sums to make sure that what you gain through switching provider - a lower rate of interest - is not lost through higher charges.
That sounds very complex, what help is available?
There are financial professionals who can advise you. Some of these are employed by lenders and may only be able to recommend the products of one mortgage provider or a small panel of providers.
A financial adviser may not be the best route to a future mortgage deal.
But there are a host of independent mortgage brokers who are free to advise you from the whole of the mortgage market.
However, be aware that they may take commission from the provider they recommend to you.
You may also have to pay a fee for independent mortgage advice.
It is also wise to do your own research to compare the rates that a lender or broker is offering you.
Source
What factors should you bear in mind when switching mortgage providers.
Can remortgaging really save money?
It depends.
It is estimated that more than half of all borrowers are continuing to pay over the odds for their mortgage each month.
Usually these people are paying the lender's standard variable mortgage rate. There will be lower rates available from other providers.
But this is not the whole story.
In recent years, banks and building societies have been hiking mortgage fees to subsidise attractive headline interest rates.
So called mortgage arrangement fees have sky-rocketed as have charges for redeeming a mortgage.
As a result, you have to do the sums to make sure that what you gain through switching provider - a lower rate of interest - is not lost through higher charges.
That sounds very complex, what help is available?
There are financial professionals who can advise you. Some of these are employed by lenders and may only be able to recommend the products of one mortgage provider or a small panel of providers.
A financial adviser may not be the best route to a future mortgage deal.
But there are a host of independent mortgage brokers who are free to advise you from the whole of the mortgage market.
However, be aware that they may take commission from the provider they recommend to you.
You may also have to pay a fee for independent mortgage advice.
It is also wise to do your own research to compare the rates that a lender or broker is offering you.
Source
Monday, June 1, 2009
What is remortgaging?
Remortgaging is when a borrower who already has a home loan with one lender switches it to another one.
The practice was relatively rare until 15 years ago, when lenders mostly offered only basic variants of variable rates.
The assumption was that borrowers would simply stick with their existing mortgage for its full duration.
Competitive market
But in the early 1990s, as property prices fell and the market was in the doldrums, mortgages became much more competitive as lenders realised that the only way to win new business was to battle for each other’s existing borrowers.
Thereafter, lenders also found themselves competing for business among new homebuyers, offering ever more sophisticated deals.
Initially, they tried to keep their borrowers by tying them to heavy redemption penalties, sometimes stretching for years after the special deals that first attracted them came to an end.
Today that practice is largely non-existent, with most penalties applying only for the lifetime of the deal itself.
Meanwhile, some 40% or more of all new loans in the UK each month are remortgages.
Source
The practice was relatively rare until 15 years ago, when lenders mostly offered only basic variants of variable rates.
The assumption was that borrowers would simply stick with their existing mortgage for its full duration.
Competitive market
But in the early 1990s, as property prices fell and the market was in the doldrums, mortgages became much more competitive as lenders realised that the only way to win new business was to battle for each other’s existing borrowers.
Thereafter, lenders also found themselves competing for business among new homebuyers, offering ever more sophisticated deals.
Initially, they tried to keep their borrowers by tying them to heavy redemption penalties, sometimes stretching for years after the special deals that first attracted them came to an end.
Today that practice is largely non-existent, with most penalties applying only for the lifetime of the deal itself.
Meanwhile, some 40% or more of all new loans in the UK each month are remortgages.
Source
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