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.

---

Getting The Best Home Equity Loan

Owing to the popularity of home equity loans, there are... Read More

What is a Tracker Mortgage?

A tracker mortgage 'tracks' the Bank of England base rate,... Read More

10 Questions To Ask Your Mortgage Rep or Banke

This post is a must read for anyone considering purchasing... Read More

A Qualified Mortgage Consultant Can Help Boost Credit Scores

Consumers interested in purchasing or refinancing a home will pay... Read More

Private Mortgage Insurance (PMI)

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

What Are Mortgage Brokers And Why To Use One

"Mortgage" is formed from two words: the French word "mort"... Read More

Should You Get a Home Inspection?

It's very important, and in my opinion, mandatory to have... Read More

Refinancing Online - Get The Best Refinance Home Loan You Can Get

When going to refinance or get a mortgage loan quote,... Read More

Home Mortgages: Up, Up and Away!

Refinance NOW-before it's too lateIf you haven't found the time... Read More

Home Equity Loan ? Good Choice for Luxury Purchases?

Home equity loans or lines of credit have increased dramatically... Read More

Mortgage Brokers or Banks: Which is Right For You?

When you're looking for a home loan, you might work... Read More

Secrets Your Banker Wont Tell You - Which Loan is Best for You?

Recently I was driving in my Car and I heard... Read More

Home Equity Loans in Texas

A few notes of importance: This only applies to... Read More

Bad Credit Mortgage Loans - Are You Killing Your Chances of Getting Approved?

When you have poor credit, your list of lenders that... Read More

Save Yourself from Homebuying Disasters

Whether you are a first time home buyer or a... Read More

Home Equity Loans ? A Big Benefit Or A Big Mistake?

When the bills are piling up and there doesn't seem... Read More

A Guide to Finding Cheap Homeowner Loans

If you're actively looking for cheap homeowner loans, there are... Read More

Online Home Equity Loans: A Basic Glossary

Home equity loans can be a great idea for individuals... Read More

Build Your Own Dream House!

So you're thinking about building your own house, are you?... Read More

First Time Buyers Fail To Shop Around

Almost two thirds of first time buyers accept the first... Read More

Interest-only Equity Loans Create Amazing Power and are Quite Easy to Get

The power of home equity and interest-only payments, provided from... Read More

Refinance Benefits - Refinancing Could Save You Money

The most common reason most people refinance is to save... Read More

Mortgage Debt Elimination

The prospect of mortgage debt elimination is something that many... Read More

Sound Financial Standing Entails Capital Raising Remortgage

Raising capital is integral for growth and expansion of an... Read More

Obtaining a Home Equity Loan Online

Private lenders, banks, and mortgage companies are all setting up... Read More

Remortgage Serves To Rewind The Reimbursements Of Mortgage

It takes a mighty big effort to secure a home... Read More

Consolidate Debt With A Home Equity Loan

If you are a home owner who is having to... Read More

5 Things In Selecting The Best Mortgage - You Should Know

Your goal is not only to find the best rates... Read More

Refinance Your Mortgage to Rebuild Credit

Refinancing your mortgage is one way to rebuild your credit,... Read More

Find the Best Mortgage Company

If you do not wish to commit to living in... Read More

Refinance Mortgage Rate and Mortgage Rates

Refinance mortgage rate is the best rate available to qualified... Read More

High Risk Home Mortgage Lenders Online

Online high risk home mortgage lenders specialize in offering loans... Read More

Low Home Mortgage Interest Rate - Finding the Best Mortgage Rate

Interest rates are at an all time low, making now... Read More