Mortgage Refinancing: Getting the Best Rate
With rate on historic low, it is easy to understand why so many homeowners
opt to refinance their mortgage. It really makes sense: low rate means low
monthly payment — it doesn’t get any clearer than that. But the thing is,
there is more to this statement than most people who want to ride the
bandwagon understand.
You see, refinancing your mortgage when the prevailing rate is lower than
the current rate you pay for your existing loan may give you enough
savings, but lenders will not give it to you on a silver platter. You have
to want it, search for it and demand for it.
Getting the best rate is like shopping for a bargain. You need to search,
even dig deep from the pile in order to get to those that remain untouched
but in great condition. When looking for the best rate, you need to dig
deep and shop around. With lots of lenders to choose from, there are no
shortages of companies to compare. That leaves you with the task for
creating a list of companies that are willing to lend you money to buy your
existing loan and give you another one.
Call possible, but reputable lenders and ask relevant questions regarding
the possibility refinancing. Do not limit your option to your existing
lender. Often, closing out your current loan and opening a new one with the
same lender incur higher fees higher than what can save from the prevailing
rate. Open your options – that’s the key.
You have to find the best mortgage lender. You do this by burning as much
time as you can. There’s no exemption. Take note that getting the first
lender that comes to your way can cost you more than what you have
bargained for.
Each refinancing deal has someone’s commission built into them. That’s a
painful fact, but it won’t be an efficient industry if not for these
commissions. The best thing to do in this case is to find the mortgage
lender that is lets you get what you deserve – lowest rate possible. But
that’s not all. You also have to consider the closing cost. Compare closing
cost (including rate) when shopping for the best lender.
Once you’ve found your lender, bargain before making a deal. Again, you
have to want it and you have to demand for it. A good lender should be able
to design a mortgage loan that fits your need but not rip you off by
injecting hidden fees all over your loan. It is your right to say ‘no’ if
you feel uncomfortable with the deal.
There are exemptions to the rule, however. You cannot get the best rate or
the lowest possible rate if you have a bad credit score and if you have
used up most of your equity. Problems with credit cards may be clear on
paper, but if the real cause of this problem is your inability to handle
your finances well, then, refinancing is no assurance that your problem
will be solved. Also, if you plan to move out from your home in the near
future, it really doesn’t make sense to refinance.
Refinancing may seem to be a wise move at the moment, but don’t forget that
rates are not the only thing that matters. Since you are extending your
loan, evaluate your current standing well. If you are confident to take it,
then take the move and get the rate that you deserve.
