Truth about refinancing in the present US economy
The strained US economy and sluggish real estate market prices pose a problem for most homeowners to go for a refinance. Refinancing a mortgage is a good option for those who are facing decreased equity, huge monthly mortgage payments, reduced income and adjustable rates, to resolve their financial uncertainties With the steep fall in the price of properties in the US and the real estate companies contracting their operations and even laying off employees, this is perhaps the best time to be certain whether or not your home loan meets your present budget and affordability. Have you ever thought of going for a refinance? It can save loads of money but it is essential for you to know the truth about refinancing before taking a step forward.
Some real estate experts have reportedly advised homeowners to be more careful with the refinance bandwagon. As refinancing has become very popular, homeowners must be extra watchful while shopping for their loan. Even the most attractive offer that tempts you can wind up being a disaster for you if you realize that your loan is really costing you. Here are some tips to remember before shopping for your loan.
- Inquire about the lender fees and points: While you’re shopping your refinance loan, be sure that you inquire about the underlying lender fees and points associated with the mortgage loan. You must understand the entire parameters of the loan so that there are no surprises left for you after you sign up with them. Usually closing costs and interest rates higher than expected are the most common surprises in store for you. Therefore, in order to avoid such surprises, get to know all that is needed about the new loan.
- Get a variety of quotes from different lenders: With the refinance becoming a recent trend, lenders are all set to take undue advantage of the financially distressed homeowners. To avoid falling into the trap of such deceiving lenders, make a comprehensive market research before settling on a particular loan. Different lenders will offer you different interest rates and varied terms and conditions. Comparing the quotes and details of the contract will help you pick the best refinance loan.
- Know about the penalties on prepayment: Some mortgages carry penalty charges on prepayment. This may vary according to the contract details of the particular mortgage. To avoid being subject to prepayment penalties, you need to call your mortgage lender and inquire about such charges on your new loan. Don’t take the decision of not refinancing due to prepayment penalties, as you will still save a huge amount of money despite giving prepayment penalties.
Refinance rates are still at its historic low, but they could shoot up any time. If you’re a struggling homeowner and you are thinking of going for a refinance to avert the risk of a foreclosure, this is the best time to take the decision. Take advantage of the historic low refinance rates but consider the things mentioned above before finalizing your choice.