The decision to re-finance a home mortgage is a serious decision which should
not be taken lightly. Homeowners should give this decision a great deal of
consideration to ensure they are making the best possible decision for their
financial situation and personal needs. Some factors to consider when deciding
whether or not to re-finance is the type of loan to choose, the lender to
choose, the costs associated with re-financing and the hassle of the process.
Consider All of the Options
Homeowners who are really considering re-financing owe it to themselves to think
about all of the options available to them. They may have a friend who recently
refinanced with a specific type of loan but this might not be the solution for
all homeowners. Each homeowner should consider their situation to be individual
and not likely to closely mirror the situations of others.
Some of the choices you have to consider include the kind of re-financing loan.
The main options are fixed interest rates and adjustable interest rates. There
are also mortgages which combine these two options. The homeowner may have a
specific type of mortgage in mind but the lender may or may not be willing to
offer the homeowner this type of loan. Lenders are more likely to offer fixed
interest mortgages to homeowners with good credit and adjustable rate mortgages
to homeowners with poor credit.
Consider the Lender
Homeowners will also have to watchfully consider the lender they decide on. This
is important because not all lenders are going to be willing to offer the same
interest rates and terms to the homeowner. Homeowners may have to receive quotes
from several different lenders in a short period of time to make an accurate
comparison. This is important because interest rates can change without notice
and homeowners who wait too long to make a decision may find the rate they were
originally quoted is no longer available to them.
When selecting a lender the homeowner should also think about how responsive the
lender is to their questions. This is imperative because a lender who does not
pay attention to the homeowner or respond to their inquiries in a timely fashion
can make the process of re-financing considerably more stressful than necessary.
Selecting a lender who offers slightly higher rates but is more responsive may
be warranted.
Consider the Cost of Re-Financing
Re-financing is not cheap. There are several costs associated with re-financing.
These costs are typically very similar to the closing costs linked with securing
an original mortgage on a property. These costs may include application fees,
loan origination fees, property taxes, appraisal fees and other miscellaneous
items. These costs can be quite extensive and homeowners may find they are often
left paying more than the benefits they are going to gain from re-financing. In
this type of situation the homeowner should make the decision not to re-finance
because it is not a financially sound decision.
Consider the Hassle of Re-Financing
Let�s face it; re-financing can be an absolute hassle. The time and energy spent
researching different re-financing options and contacting lenders to see who
will offer the most favorable rates can be quite taxing. A homeowner should
consider the time and effort required for this endeavor in deciding whether or
not to re-finance. Simply stated, refinancing is a hassle and homeowners may
better spend their time with family and friends rather than running around
trying to find the best rates in town.
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