Mortgage Refinancing

Mortgage refinancing is paying off your first mortgage and getting a second mortgage. When a homeowner has difficulty making their monthly mortgage payment or need additional funds for home improvement, college, or to start a business, mortgage refinancing is an option to help you meet these needs.

When you secure mortgage refinancing, you will be able to get a lower interest rate which makes your monthly mortgage payment lower. You can also change your loan type when you refinance. If you are considering this option, you should assess your financial situation and consider the following:

• How long do you plan to stay in your home?
• How many years do you have left to pay on your existing mortgage?
• Can you afford to pay the additional fees to refinance your home?
• Will the loan put a strain on your finances?

You will have to provide the same information for mortgage refinancing as you did when you obtained your original mortgage loan. You will have to provide information about your debts, current assets, verification of employment, verification of your income, your bank accounts, and the title to your home. There will be a credit check. You will need to have your home appraised to determine the equity amount.

Another requirement is to provide information regarding your current mortgage loan such as the outstanding balance, the status of insurance payments, and property taxes. If you are changing lenders, you will need to provide contact information for your original lender.

There are fees associated with refinancing which include:

• Application fee
• Title search
• Title insurance fees
• Appraisal costs
• Prepayment penalties
• Loan origination fee
• Discount fees
• Legal fees, if applicable

Some lenders will negotiate these fees or waive them. If they do, your interest rate may go up. Make sure you understand what will happen if you do not pay these fees.

You can use a mortgage calculator to determine whether mortgage refinancing is a viable option for you. Mortgage lending web sites have calculators available for use. You can also discuss your situation with a financial advisor or with the company that holds your existing mortgage. Your existing mortgage company may offer you mortgage refinancing with a lower interest rate.

Look before you leap. Your financial situation may be crying out to make an immediate move but you could make a mistake that could worsen the situation for you.