Thursday, March 1, 2007

A Quick Guide To Refinancing Your Mortgage by Michael Burns

Even slight percentage point shifts can lead to major financial changes. This is the fact that refinancing hinges on. You might mistakenly perceive that it is created to change an old mortage; but it is actually a new mortgage taken to pay the old one.

Now, in the real world, taking out a new loan to pay off another, would not make much sense. But, refinancing gives the borrower the chance to exploit many things, and one of them is significantly lower interest rates. This could mean it's two percentage points under. Mortgages are big sums of money that have your house as collateral. Therefore, when you convert the percentage point difference into monetary terms, you could save a lot.

Why do people opt to refinance? It is because the interest rates are lower and the processing time is faster. But while all these sound very commonplace and easy, mortgage refinancing could be a disaster if you don't understand how it works.

How will refinancing benefit you?

Having mentioned the potential upsides, it's very tempting to just jump into refinancing. However, a refinanced mortgage is still a loan. Thus, you are not spared from the fees you will still need to pay.

Will your savings be higher than your new expenses? To find out if this is the case you can use the free refinance calculator on our site:

One of the problems complained about loans are the terms. Your old mortgage deal might have made it difficult for you to keep up with your payments, but having your mortgage refinanced could remedy this. It is, thus, advised that you only agree to refinance your mortgage if the interest rate is lower by at least two percentage points, to be safe.

You will be elated to find out that some banks have no-cost refinancing schemes. This means you don't have to shell out for the initial fees, etc. These costs will just be deducted from your principal or be reflected in the form of slightly higher interest rates. Despite this, however, it is still an option you should check out.

There are three main things you will benefit from taking a refinancing program. First, you have the chance to pay off your loan early or just a huge part of it and reduce your interest rate. Second, as said previously, are lower interest rates. But, perhaps, the best part is that you can choose between operating under an adjustable mortgage rate or a fixed rate mortgage.

Mortgage refinancing is no doubt a good way to get out of longstanding debt. However, do realize that however which way you see it, it is still a loan. It is your responsibility to adhere to the deal with your creditor. Remember, mortgage refinancing is not for everyone so once you get approved, you should make sure you don't stray. Consult the free refinance calculator at our site to see if you qualify.

Michael Burns is the home refinance expert behind the website Feel free to visit our site to get the latest refinance rates, use our mortgage calculator or just stay up to date with the latest mortgage refinance.

Article Source: Article Directory - Super Feature

1 comment:

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