Calculating the Costs of Refinancing Your Home Loan

With the explosion of adjustable rate mortgages on the real estate scene over the past several years, refinancing the home loan has become a popular move for many home owners. But you should always check out the costs of refinancing your mortgage before you sign.

In many cases, refinancing a home loan makes good financial sense. You can lock in a low, steady rate of interest without the fear of balloon payments. But refinancing a new home loan also comes with several fees that you should be aware of before you complete this transaction. And in some cases, refinancing a mortgage will cost a lot more money that it will save.

Costs of Refinancing a Home Loan

One way you can be sure that you are doing the right thing is to figure out the approximate fees for refinancing your home loan. Here are some of the fees you may encounter when you refinance an existing mortgage.

• » Application Fees: Your lender will charge this fee in order to begin the mortgage refinancing process and check your credit
• » Title Search and Insurance: This fee covers the cost of researching the property as well as a policy
• » Loan Origination Fees: This fee is charged by your lender in order to prepare the new mortgage arrangement
  

Tips for Refinancing Your Mortgage

There are some things that you can do to lower the amount of mortgage refinancing fees that you will pay to complete this process. Keep these tips in mind when you begin the process.

Up-Front Fees: One sure way to cut down on unexpected fees is to do business with a lender that announces their fees up front Shop Around: Do some comparison shopping to discover the average amount of the fees you will be paying to your lender

Knowing the cost of refinancing your current home mortgage will go a long way in ensuring that you get the best deal.

About the Author
Kelly Richardson covers the local education and technology scenes in major cities across the country. His articles appear in educational journals, periodicals, and e-zines.

Let Your Down Payment Work For You

When buying a new home, too many people rush into home shopping phase and completely bypass one of the most important aspects, the down payment. Not only does the down payment affect the size of the home you'll buy, but it also determines how you write your purchase offer, what type of new home loan you qualify for, and the type of mortgage interest rate you obtain.

Writing the Purchase Offer

One important reason to know how much money you have to put down on a new home is that it has a great effect on how you write your offer. When writing an offer, not only are you required to put your down payment information in the offer, but various mortgage programs also have different rules on how the offer can be written. This can become a vital step, especially when dealing with FHA and VA loans.

What Kind of Mortgage Can I Qualify For?

The amount of your down payment can actually affect your ability to qualify for a new home loan. If you are only able to put down a small amount, mortgage lenders tend to be quite strict when it comes to conforming to underwriting guidelines. However, if you have the ability to make a larger down payment, many lenders will tend to make allowances or exceptions to the rules.

Mortgage Interest Rate Options

When shopping for interest rates, the amount of your down payment can often dictate your new home loan interest rate. Many loan programs charge a higher interest rate for minimal down payments, while customers with larger down payments are allowed more flexibility in interest rates and actual mortgage program choices.

Your down payment affects many aspects of buying a new home. And while it seems that the more money you put down, the better the mortgage options you will be afforded, that is not always so. The most important thing is that you do your research. Familiarize yourself with your neighborhood, learn about what types of mortgage and down payment options you have, and then, when you are ready to purchase that new home, you'll be prepared to find the right loan for your budget and lifestyle.

About the Author
Debbie Wilson owns and operates a lakeside resort. Debbie holds a B.A. in Business Management with a minor in Physical Education.

Mortgage Backed Securities: Where The Money Comes From

When you apply for a mortgage, the company you make your monthly payment to rarely owns your loan. Rather, they are the "servicer" of your mortgage. But understanding how the refinancing process works can help you make better financial decisions. And this entails knowing more about mortgage-backed securities

Most money from home mortgages comes from three major institutions: Fannie Mae (FNMA), Freddie Mac (FHLMC), and Ginnie Mae (GNMA). Once they purchase your loan, it gets put into a pool of loans, which then gets sorted into smaller ownership parcels. These smaller parcels are known as mortgage-backed securities. And because each parcel or security represents a diversified pool, your risk is much less than it would be with a single investment.

Mortgage Investments

Mortgage backed securities are sold on Wall Street to institutions or individual investors. These securities usually earn a higher interest rate than treasury bonds and thus tend to be more popular. By selling the mortgage-backed securities, the institution is able to obtain new funds, which in turn allows them to buy more mortgage pools. And so the cycle continues from loan to loan just like this.

Refinancing Options

Now that you are ready to refinance your home, do some research. Check out who will service your mortgage. You may notice that at times, your loan gets transferred to another company. That doesn't mean your loan was sold, however the right to service your loan was. What is more important is that you check out all your options, including interest rates, mortgage lenders, types of loans offered, and of course, lender reputations. You'll be glad you did!

About the Author
Debbie Wilson owns and operates a lakeside resort. Her previous experience includes profitability consulting for a national healthcare company. Debbie holds a B.A. in Business Management with a minor in Physical Education.

Beware Of Home Mortgage Refinance Rip-Offs

Refinancing a home mortgage can indeed save you a great deal of money and help you consolidate debt. However, before you jump at the first low-interest rate loan, beware of mortgage rip-offs, including administration fees, title insurance costs, and credit report charges.

Mortgage Document And Administration Fees

Many mortgage lenders today charge separately for document preparation and administrative fees. However, the mortgage origination fee should cover all these refinancing costs. To ensure this doesn't happen to your, ask your bank or mortgage lender to waive these charges up front.

Title Insurance Costs

Title insurance companies may add as much as $300 to your home mortgage refinancing closing costs for ancillary charges, such as title search and binder fees. Be persistent upon demanding these be included in your original insurance charge. A typical insurance charge may be as high as $6,000, depending upon where you live.

Credit Report Charges

Credit reports and courier fees can tack on as much as $200 to your home mortgage refinance loan. To make sure this doesn't happen to you, negotiate to no more than the going rate before signing up with a lender. Credit reports should only cost between $6 - 12 and approximately $20 for courier fees.

Don't get caught misinformed and taken advantage of. Next time you're ready to embark upon home mortgage refinancing, get the facts, know your rights, and speak up. By firming up all hidden mortgage costs and fee upfront, you won't get stuck with a mortgage rip-off on the back end.

About the Author
Debbie Wilson owns and operates a lakeside resort. Her previous experience includes profitability consulting for a national healthcare company. Debbie holds a B.A. in Business Management with a minor in Physical Education.