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