Understanding the basics of the mortgage process is an excellent way to prepare when choosing the perfect mortgage. The process of obtaining a new mortgage is complicated; however, the basics are easy enough for even the most inexperienced homeowner. Here are several tips to get you on the right track when refinancing your mortgage.
There are three basics concepts you need to understand before refinancing your mortgage. When comparison shopping for a new loan, you’ll compare these items before choosing a lender.
I. Mortgage Term Length
Term is the length of time you have to repay the loan. Common mortgage term lengths include 15 or 30 year loans; however, there are now 40 and 50 year terms. The longer the term length you choose, the lower your monthly payment will be. The disadvantage of choosing a longer term length is that you will qualify for a higher mortgage rate and pay more to the lender over the lifetime of your loan.
II. Interest Rate
The interest rate you qualify determines how much you will pay for financing your home over the term of the mortgage loan. You have the choice of a fixed-rate or adjustable rate mortgage. The mortgage rate associated with fixed-rate loans stays constant of the lifetime of the mortgage. The interest rate for an adjustable-rate mortgage starts with a low introductory rate and generally increases over the life of the loan.
III. Fees and Other Expenses
Mortgage loans come with a variety of fees that must be paid before the process can be completed. Many of these charges come from third parties; you can shop around and compare fees and extras from a variety of lenders. When comparison shopping for your mortgage, it is important to negotiate with your lenders to avoid paying Yield Spread Premium with your mortgage interest rate. Also, make sure you are comparing “oranges to oranges” with the types of loans you compare.
You can learn more about refinancing your mortgage while avoiding costly mistakes like Yield Spread Premium with a free mortgage video tutorial.
To get your FREE six-part Mortgage Refinancing Tutorial, visit RefiAdvisor.com using the link below.
Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. To get your hands on this free video tutorial: "Mortgage Refinance - What You Need to Know," which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit Refiadvisor.com.
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Refinancing Mortgage
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