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Arm Yourself For Refinancing
Refinancing loans should not be taken lightly. After all, if you’re not careful, they can end up as liabilities, rather than helping you. Before you take the plunge and get a refinancing loan, know the different refinancing strategies involved. Here’s to give you an idea why.
Are you qualified to take a refinancing loan?
Different people get refinancing loans for different reasons. Generally speaking, a refinancing loan is designed to reduce monthly payments. Some people refinance to shift to another type of loan, others to build equity faster. Whatever your reason is, there are a few things you should know about refinancing loan policies, so listen up.
Before you put on your hat and head off to your lender to refinance your loans, you should assess your personal eligibility to refinance. Ask yourself basic questions like:
• How long do I plan to stay in my home?
• How many years are left on my current loan?
• Do I have enough resources to cover the expenses that come with refinancing mortgage loans?
Answer these questions as best as you can. No cheating! These questions will not only determine your personal qualifications for a refinancing loan, but will also help you decide the type of mortgage you’re better off with. Depending on your needs, you can choose from the different terms and interest rates offered by a lender.
As if a personal assessment isn’t bad enough, be prepared for another evaluation – this time by the lender. Based on your income, property value, existing mortgage information, and other pertinent data, the lender will confirm your eligibility for a refinancing loan. Sounds scary? Not to worry. As long as you have all your finances in order, getting a refinancing loan should be a cinch.
What does it take to get a refinancing loan?
If all goes well with your evaluation, you can begin the process of refinancing. Mortgage loans may be refinanced by the original lender. However, it is a very good idea to contact other companies and compare rates. If you find better deals from other lenders, by all means, switch.
Once you’ve picked a lender, be prepared to face additional expenses. Other expenses that came with a refinancing loan may include closing fees, application fees, title insurance and title search fees, appraisal costs, discount points, loan origination fee, prepayment penalties, and legal service fees. The cost of refinancing mortgage loans varies from one case to another. In some cases, a new appraisal will not be required. Other fees may be negotiated or waived, so put that power of persuasion to work.
Getting around refinancing fees
If you want to refinance your loan without spending too much on “additional expenses”, you may contact lenders that offer “no-cost” refinancing. Ask around for lenders that do not require up-front payments such as closing fees and application fees. While some lenders stick to their promise of “no-cost” refinancing, others don’t.
If you have time, try visiting all your prospects. Be prepared with a list of questions to ask the lender. Compare the offers and other important information gathered, and start narrowing down your list. Look out for hidden charges and other unnecessary fees charged by the lender.
If you want to speed up the application process of refinancing, work with lenders that use automated underwriting. Automated underwriting decreases the amount of time it takes to produce a loan approval. It also reduces the initial refinancing fees. Lenders using automated underwriting do not require property appraisal, therefore eliminating this expense.
As long as you come prepared and know everything you need to know about refinancing loans, you’re in good shape. Good luck to the lender who tries to cross you.
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