Lower mortgage rates offer a tempting reason to consider refinancing your nest. Other common reasons for refinancing mortgage loans include cashing out equity, changing the type of loan, getting better terms or changing the length of the mortgage. Like your original mortgage, you'll find many options when you refinance. Shopping around to find the best terms and rates saves you money down the road. Everything from the fees to the interest rate plays a role in picking a mortgage refinance loan.
Write down your goals for the home refinance to help guide the process, whether you need the cash equity or want a lower rate. Discuss the terms and other preferences you have for the new loan.
Call the lender that currently holds your mortgage to determine the refinance options it offers. The Federal Reserve Board notes that the company might offer you a better deal on the refinancing loan to keep your business.
Schedule appointments at other financial institutions, including banks and credit unions. Ask for all of the terms and details of the refinance loan options in writing so you have a reference.
Enter the details of each loan refinance option into a spreadsheet. Include the interest rate, length of the loan, fees and specific terms for each loan. Note the type of loan, whether it is a fixed-rate, adjustable-rate, interest-only or balloon. Comparing the same type of loans to one another will allow you to better decide which option is best.
Review the spreadsheet to compare all of the details of each refinance option. Compare the terms of the refinance options to your current loan to determine if the refinance options will save you money through lower rates or better terms. Choose the refinance option that best helps you achieve your goals.
- You might have the option of negotiating the terms of the refinance loan if there are certain terms or details you want changed.