Best Refinance
Getting the best refinance can be a daunting task if you are not aware of the prevalent market conditions and rates of interest. There are literally scores of alluring and competing refinancing options, but you need to take an informed and educated decision to choose the type that fits your needs perfectly. You must do your homework thoroughly to evaluate your financial needs, temperament, credit profile, sources of income and circumstances.
Consider a situation where you are considering buying a home. Buying a home is an expensive purchase and so it is important that you find a loan that best suits your needs and financial situation. Also, it is important that you have a clear cut idea about the loan in all its aspects; otherwise the massive application fees, high interest rates, hidden charges and ever-increasing annual fees can give you many sleepless nights and take the gloss of the excitement of getting your dream home.
Choosing the best mortgage refinance will save you thousands of dollars and a misinformed decision may cost your home. You have to select the best refinance offer out of mortgages with fixed or variable interest rate, interest only payments, balloon payments, cash back refinancing and much more. For this, you need to do an extensive comparison shopping. You can visit the various refinance companies in your locality or look up the agencies on the Internet. Getting the best refinance not only depends upon the lending agency that you choose, but it also depends upon your efforts, awareness, and intelligence.
It hardly needs to be mentioned that you may have to shell out some money as documentation and processing fees to your new lender or broker. This would be in addition to what you paid in your first mortgage. These upfront payments include loan organization fee, points and closing costs and so on. Review your loan agreement carefully and read the thin prints all the more carefully. There may be some uncomfortable legal conditions and clauses, which you may ignore at your peril. The moneylenders quite often try to slip past the junk fees to their borrowers. Keep a record of your knowledge gained through comparison-shopping and compare each point of your contract with those offered by other moneylenders and brokers in the market.
Another important factor for getting the best refinance is the credit comparison rates—CCRs. It is, moreover, a great money saving tool when you are selecting the best refinance for your mortgage. The borrowers usually compare the interest rates that the lending companies advertise and base their selection on them. You must know that interest is not the only cost that is levied upon you on your refinance. Though it forms a major chunk of your payments, there are many hidden costs whose knowledge will help you make huge savings. These are the upfront and ongoing fees that contribute towards your total liability. Comparison rate is an independent calculation that takes into account the prevailing interest rates and also the upfront charges and fees over the life of the loan, which, on an average, is twenty-five years. Some lenders try to hide these additional costs through the fine prints in the agreement documents.
The comparison rate takes the confusion and complexity out of the huge diversity of conflicting refinance offers and also the honeymoon rates. It is usually based on a refinance amount of $150,000 spread over a 25-year period. It has been mandatory for decades in the US for the moneylenders to publish the comparison rate in their advertisements. Later on it has also been introduced in Australia as a step in consumer protection since July 2003 since the advertised rates did not offer a fair comparison.