|
The Basics of Home Loan Refinancing
Author David Schneider | Aug 29,2007
|
Home loan refinancing is a much simpler process than getting original financing for your home. After all, you have an established mortgage payment history, you already own the home, you aren't negotiating for a price that will pay off someone else's mortgage and provide them with a profit and you have already qualified before for a mortgage. However, before you apply for a home refinance loan you need to understand what elements make up a refinancing package.
Types of Refinancing Products Available
There are dozens of refinancing options available. If you are interested in refinancing your first mortgage, then you can select from 30-year fixed refinance mortgages, 20-year fixed refinance mortgages, 15-year fixed refinance mortgages, one-year ARM refinance mortgages, 3/1 ARM refinance mortgage and FHA 30-year fixed refinance mortgages. On the other hand, if you are interested in refinancing your second mortgage you can select from HELOCs and fixed home equity loan refinancing products. You also have the option of selecting an ARM instead of a fixed rate mortgage.
APRs
When you refinance your mortgage your APR is going to reflect several things. First of all, it will be impacted by the current price index position. The price index fluctuates nearly on a daily basis, so large changes between years are common. Next, it will be influenced by your credit rating. People with excellent credit will receive the best APRs, people with good credit ratings will receive average APRs and people with poor credit ratings will receive slightly higher APRs. If you have some extra money set aside, you can lower your APRs by paying points upfront at closing. This can help you reduce your APR by up to one percent.
Options
You have two options when it comes to refinancing your mortgage if you are refinancing to cash out the equity in your home. The first option is to refinance with a first mortgage. This option is a better option for people who have a lot of equity built up in their home and who have good to excellent credit. The second option is to cash out equity from your home by taking out a second mortgage. This is a good option for people with less than perfect credit, for people with less than 25 percent equity built up in their home and for people who need a lot of money.
Lenders
There are hundreds of lenders who offer mortgage refinancing packages. Some are big name financial institutions, while others are small companies that you may never have heard of. When you are selecting a lender, you will want to find one that has an established track record, that offers the types of refinancing options that you are interested in and that will work with someone who has your credit and financial profile. |
|
|
Print
E-mail
Del.icio.us
Digg
