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Digital News Report – The Obama Housing Scorecard for September reported that homeowners are refinancing mortgage loans to lower their interest rates. The mortgage loan interest rates have been at historic lows making it an attractive option for those that can qualify for a traditional home loan refinance. Home loan refinancing was completed by 7.1 million homeowners since April of 2009. The Obama Housing Scorecard report said that these homeowners have saved $12.7 billion altogether; which is all the interest that they will not be paying because of refinancing their home loan mortgage to the new lower interest rates.
To refinance existing mortgages you would shop around to different lenders to find the best offer. Depending on where you live and your credit score, will help to determine what interest rates you qualify for a refinance. If you shorten the duration of your mortgage loan you can often lower your interest rate considerably. If you have no problems making your mortgage payments and are comfortable with taking on the shorter term you can pay off the mortgage quicker and save a bunch of money in the long term. If you are not sure that you will be able to make the 15 year mortgage payments you can get a 30 year mortgage and pay more in interest.
Make sure you look for a mortgage loan that will not have any early payoff penalties, that way you can pay off more that you owe each month when you have the extra funds to do so. You can still shorten the duration of the loan, but you don’t have to make the higher payments each month if you think you might have a difficult time making the payments each month.
Make sure you know what kind of mortgage loan you are refinancing to. Do you want an adjustable rate mortgage (ARM) or a fixed rate mortgage? Since the housing and mortgage loan crisis, many homeowners are staying away from the adjustable rate loans and opting for a fixed interest rate. The benefit to a fixed interest rate is that your interest rate will never change. In an adjustable rate mortgage the interest rate will go up and down based on the current rate plus what is set forth in the term of the loan itself. Because interest rates are so low, most homeowners will not want an adjustable rate because the chances are very likely that the interest rates will be going up.
Ask the mortgage refinance companies that you are getting quotes from what they require from you. Find out if you will need to pay the closing costs and how much money would that be. Ask them what are the requirements for how much equity that you will need to meet their requirement for the mortgage loan refinance. Have them detail the costs and requirements out for you. Some banks will have you pay an application fee up front which helps to pay for the property value appraisal. By making sure you know how much it will cost you, it will help to determine which mortgage loan quote is the best deal.
By: Victoria Brown