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Refinancing Your
Loan
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Refinancing your home or property is a big decision that could drastically
affect your financial future, for the good or the bad, depending on
how smart you go about the process. Take the time to explore all of
the different refinancing options you have available to you. Many loan
agents offer you refinancing deals that seem too good to be true, and
while most of them seem to have your best interests at heart, do try
to keep in mind that they are not paid unless they approve you for a
loan--and you take it. Refinancing your mortgage can lower your monthly
payments, lower the amount of interest you pay on your loan, or even
shorten the term of your mortgage without having to pay a penalty for
early mortgage pay off.
Refinancing a mortgage usually involves allowing a loan company to pay
off your original home loan in return for you signing a loan contract
with them. Most times, the second loan is more beneficial to the mortgagee,
especially for that present time.
There are a couple of things you want to consider when trying to decide
whether or not to refinance your home loan. First off, a lender usually
charges fees on a point system; the points on your mortgage can range
anywhere from zero points to four, depending on the credit worthiness
of the borrower, and the type of lender you are using. Some lenders
may offer a much lower interest rate with a higher number of points,
while others may offer a higher interest rate and only zero to one point
involved. Points are fees that are equal to one percent of the face
value of the loan. A $200,000 loan with three points would cost the
borrower $6,000 up front. A lower number of discount points may cause
the loan to have a higher interest rate than the loan you are thinking
of refinancing, perhaps causing your loan to cost you more in the end.
Of course, when thinking of refinancing, you are going to want to make
sure that it will be in your benefit! The penalty costs of paying off
your loan or mortgage early, the cost of appraising your home, related
attorney costs, settlement fees, and closing costs are all amounts that
should be taken into consideration when one is refinancing. As far
as your current loan is concerned, these are all costs that, more often
than not, have already been taken care of and you could be making things
worse for yourself by taking these things on again, especially if your
reason for refinancing is a rather tight financial situation.
The mistake not to make is to refinance to save your mortgage, to keep
a bank or lender from foreclosing on your property. While sometimes
situations like this are inescapable, borrowers who attempt to refinance
their properties and homes under conditions such as this often end up
essentially paying more than they were, saving their property and possibly
harming their credit in the process.
About The Author:
Peter Dobler is a veteran in the IT business. His passion for experimenting
with new internet marketing strategies leads him to explore new niche
markets.
Read more about his experience with real estate; visit
http://real-estate.online-business-idea.com
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