6 Things to Consider Before Refinancing

Perhaps you're a homeowner in need of some quick cash.

Maybe you want to consolidate your debts so you have better control of your money.

Perhaps a lender is urging you to refinance because interest rates are low, and he has a too-good-to-be-true deal that will shorten your current loan's term.

Here are 6 essential questions to ask yourself before making the decision to refinance.

1. What's My Motive-and What Will It Cost Me?

Before you even consider a refinance, ask yourself this fundamental question: "Why do I need it?"

"Many times, people take out a new, larger loan to pay off credit cards, automobiles or even to purchase another home," says Norm Bour, host of the nationally syndicated U.S. radio program The Real Estate & Finance Show, and an experienced mortgage lender. "Sometimes they need the money to do home improvements or renovations."

If, however, you want to lower your current loan payments or switch to a different type of loan, you must calculate the benefits before going the re-fi route.

"If someone is going from a fixed loan to another fixed loan, my general benchmark is to see a 1% reduction of interest rates to justify it," says Bour, who also teaches money-management classes in Southern California. "Sometimes the borrower goes from a fixed-rate loan to an adjustable to lower his payments. Sometimes he does just the opposite-maybe to get away from interest-rate volatility. These are very personal decisions, specific to each individual client."

2. How Long Will I Be in the Property?

You may already know-or suspect-that you will not live in your current home beyond a certain timeframe (perhaps 5 years). If this is the case, why would you even consider a 30-year loan?

"Sometimes, an adjustable-rate loan or a 'hybrid'-say, a 5-year fixed, then converting to an adjustable-makes the most sense," Bour says.

3. What Am I Worth?

Do your homework before trying to qualify for a new loan. You should know:

? The approximate market value of your property, as "loan to value (LTV) is one of the primary factors that control interest rate," Bour says.

? Your credit score, which will affect your overall ability to secure a loan, as well as the interest rates offered and the options available to you.

4. Do I Have a Competent Loan Officer?

In certain cases, refinancing may not yield "a monetary savings, per se," Bour says. This means there must be "compelling reasons" to secure a new loan, he emphasizes.

"A good loan officer will ask a series of questions to help the borrower identify his best option," Bour says. The officer should:

? Assess your current monthly cash flow and potential future risks.

? Calculate your monthly savings if you were to refinance.

? Determine how long it will take you to break even.

? Fully explain the different types of loans and interest structures.

? Disclose all closing costs and "hidden" fees (origination fees, escrow, title, underwriting, interest, taxes, insurance, prepayment penalties, etc.).

? Treat you with respect and as an individual-not come up with a one-size-fits-all, cookie-cutter approach to your financial future.

5. Do I Need a Second Opinion?

Because lenders have an interest (pun intended) in having you sign on the dotted line, it's often worthwhile to seek advice from a certified financial planner or other expert who has no investment or agenda when it comes to your refinancing decisions-especially if you're a first-timer who lacks fluency in real estate issues.

Accept your limitations, and have enough smarts to ask for help. A lot of money is riding on this decision, so never let pride get in the way of making the right choice.

6. Will This Hurt My Credit Rating? "While refinancing, in and of itself, will do very little damage to credit scores, what will cause harm is excessive shopping amongst too many lenders," Bour says. "Each time a credit report is pulled by a 'potential grantor of credit,' it shows up as an 'inquiry'-and each inquiry drops the credit score by a little bit.

"In the United States, the laws have changed over the past few years, and inquiries do not have the same negative impact as they used to. Most credit bureaus will now look at a 'cluster' of inquiries over a short period of time as being one inquiry."

--------

Mortgage Relief specializes in assisting Australian families with mortgages by making their monthly repayments more manageable and decreasing their overall debt and total interest paid over the life of their mortgage. Mortgage Relief is a mortgage refinance provider that it part of Australia's largest Debt Relief? organization. Visit Mortgage Relief on the web at http://www.mortgagerelief.com.au or contact them directly on 1300 789 014.

---

What is a Repayment Mortgage?

A repayment mortgage is the type of mortgage that most... Read More

Mortgage Advice

In the US today more households have mortgages than ever... Read More

What Your Mortgage Lender Is Not Telling You About Accelerated Mortgages

For years, mainstream banks and financial advisors have been recommending... Read More

Gearing Up for Bad Credit Mortgages

Mortgage would have never happened, had mortgages been a no... Read More

Private Mortgage Insurance (PMI)

If your down payment on a home is less than... Read More

Mortgage-Refinance Loan Can Put Cash in Your Pocket

Do you need cash? Here's a mortgage for you. If... Read More

First-time House Buyers: to Buy or Not to Buy; that is the Question

Buying your first house is always a difficult time. There... Read More

High Risk Mortgage Lenders - Using a Sub Prime Lender Online

Sub prime lenders handle high risk mortgage loans that traditional... Read More

Recent Bankruptcy? Its Not Impossible to Obtain a Home Loan

Because the new bankruptcy laws go into effect on October... Read More

Refinancing Your Mortgage Can Open Up A Lot Of Options For You And Your Family

It can happen to anyone, the roof is leaking, the... Read More

Buying a Home With Bad Credit - Why a Recent Bankruptcy Will Not Stop You From Getting Approved

Buying a home with bad credit is possible with the... Read More

How to Compare Fixed Rate Mortgages and Adjustable Rate Mortgages

There are many types of mortgages, and the more you... Read More

Mortgage and Credit Card Companies Under the Spotlight on Consumer Charging

For the first time since May 1996 reports have indicated... Read More

Refinance Online

If you want a low interest, low payment mortgage refinance,... Read More

Online Mortgage Loan Companies Are Convenient

There are many reasons to use the internet to take... Read More

Refinance Home Loan and Refinance Home Loans

Refinance home loan lenders are eager to lend money to... Read More

Mortgage Glossary of Terms

A brief list of some of the most common Mortgage... Read More

Seller Financing

Although any loan used for buying real estate is strictly... Read More

Helpful Mortgage Advice

Mortgage advice overwhelming you? Many people get advice from everyone... Read More

Buying a Home After a Foreclosure

Buying a home after a foreclosure is not an impossible... Read More

Good FICO Credit Score? Tips to Getting the Most Out of Your Home Mortgage Loan With Good Credit

Sometimes so much is talked about how to solve the... Read More

How do I know what is the best Second Mortgage Home Loan for me?

The information in your credit history helps mortgage lenders decide... Read More

Home Construction Loans

You can maximize your savings by shopping for a lender... Read More

Life of an Escrow

Escrow is one of the last stages in the purchase... Read More

Before You Buy

Before you start looking for a home, figure out what... Read More

Types of Mortgage Interest Rate

Here is a useful guide to the different types of... Read More

A Mortgage Loan For Homes

Everybody wants to own a house because it is something... Read More

Choosing The Right Mortgage For You

This article will help you understand the differences between a... Read More

Reverse Mortgage ? Be Sure You Need It Before Applying For One

Reverse mortgages used to be considered the last resort of... Read More

The Best Tactics for Getting a Quick Homeowner Loan

Trying to find a quick homeowner loan can seem difficult... Read More

PayDay Loan Online - Quick Cash Advance Loans Online Are Very Convenient

Getting a quick cash loan, cash advance or payday loan... Read More

Kings Bay Georgia Mortgage Information

When choosing the right mortgage company for your home purchase... Read More

Option ARM Mortgage Loan - Is This Really for You?

What happened to the days of a 15 or 30... Read More