| Refinancing has become a valid option for many | | | | an early pay out could involve a penalty that would |
| individuals with high interest rates on their mortgage. | | | | negate the benefits of refinancing. |
| Refinancing is essentially a replacement loan, with a | | | | What will it cost me? |
| different lender and (hopefully) a lower interest rate. | | | | Refinancing does carry some costs that you need to |
| So why would you choose to refinance? | | | | be made aware. |
| - You may be able to take advantage of lower | | | | - Valuation Fee - This is the fee for a professional |
| interest rates. | | | | appraisal of the value of your house. |
| - You may also be able to extend the repayment | | | | - Credit Report - An assessment of your credit health |
| period of your mortgage. While you will end up paying | | | | - Escrow - Fee for money transferred by a third party. |
| more in interest charges for this, this will reduce your | | | | - Lender Fees - Any other fees that are incurred by |
| monthly outgoings. | | | | using a particular lender |
| - You may be able to switch from a variable rate to a | | | | Am I eligible? |
| fixed rate mortgage, giving you greater security in the | | | | Applying for mortgage refinance is just like applying for |
| future from potential rate increases. | | | | another loan. There is a set criteria for acceptance. |
| - You may also be able to increase the amount of | | | | Every missed mortgage payment will count against |
| your mortgage, to pay off other, higher interest rate | | | | you in the application, either resulting in a greater |
| liabilities such as credit card debt, cell phone debt and | | | | interest rate or a refused application. |
| personal loan debt. This will enable you to save money | | | | Should I choose refinancing? |
| on interest rate charges | | | | You will need to assess your current mortgage and |
| Why would you avoid refinance? | | | | the changeover costs and savings to ascertain |
| If you decide to borrow more than your existing | | | | whether it will be of benefit to you. There are specific |
| mortgage, you need to be wary of your budget. If you | | | | refinancing calculators that can help you determine the |
| default on your payments you run the risk of losing | | | | net gain. The best one that I have found is here [ |
| your house. | | | | As a rule of thumb many lenders advocate that a 1% |
| If you do not calculate the costs involved with | | | | gap between your current interest rate and a |
| refinancing correctly, you could end up paying more in | | | | refinance rate makes refinance a worthwhile option. |
| interest charges. | | | | Always make sure to speak to a financial professional |
| Thoroughly review the contract of your existing loan, | | | | before deciding to refinance your mortgage. |