Mortgages, Personal Finance - Friday, October 17, 2008 7:46 - 0 Comments

Basic Guide To Refinancing a Mortgage

What is mortgage refinancing? It means paying off an existing loan with the proceeds from a new loan, usually of the same size, and using the same property as collateral.

Mortgage refinancing is popular among homeowners because with it they can get hold of a lower mortgage rate; shorten their mortgage term; or get extra money.

When mortgage refinancing, you should always shop around and speak to more than one lender. One way to get a better deal which will allow you to pay less each month is to tell the loans officer that you are shopping around for the lowest rate or best deal because you want to reduce your monthly payment. This openness at the start will let them know they need to give you their best offer to get your custom. This should result in you getting a great deal and slash you monthly costs.

To avail of mortgage refinancing will, in the short term, costs money. One could spend up to a few thousand dollars when planning to undergo this process. The inevitable closing costs must be expected to be paid by the borrower since mortgage refinancing will close an existing loan and open a new one. A borrower must pay this.

A better deal when mortgage refinancing would probably be yours if you have a better credit score. If your credit score is poor, obviously, you won’t get a better deal than someone whose credit rating is good.

In credit scoring, the key is verification. If something is not verified, it is useless. Bear in mind that you can get lower interest rate if you have a good credit score.

Mortgage refinancing loans can be a fixed rate or variable rate and can be used for different purposes. Remember if you are just looking to cut your monthly bills then mortgage refinancing is not the only way of doing it; there are other ways.

Homeowners with poor credits will most likely be turned down by the lenders they apply to. Keeping a good credit score is something that builds the trust of the lender, implying that you are secured enough to pay back the loan. 

So take care of your credit score!