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If you took a house with a 30-year, fixed-rate mortgage at about 8.3%, you can get it refinanced on an 18-year loan at 7.2% with a mortgage refinancing program. The closing costs can be rolled over into the new loan, equaling one month's mortgage payment. This way, the payment might actually go up slightly, but the equity will get to be built much faster. When the rates get further slashed, you can start thinking about another mortgage refinancing loan, maybe into a 15 or 10-year loan.
Fortunately, you don't have to worry about timing the bottom, either. It still makes sense especially if your rate is above 7.5%. Refinancing to a rate between 6.5% and 7.4% is still a pretty good deal, says Frank Nothaft, deputy chief economist at Freddie Mac, which buys mortgages for resale on the bond markets. He expects rates to stay in that range for a while. Mortgage refinancing is beneficial for you if you can lower your monthly payment and recover the closing costs before you move or refinance again.
For people trapped in an adjustable-rate mortgage, it is advisable to convert it with mortgage refinancing into a new fixed-rate loan. Usually the first year of an ARM is artificially low, and you could be in for a full two-point rise after completing the first year. That puts you roughly at today's 30-year fixed rate. With rates at a historical low, it's better just to go to a fully amortizing 30-year fixed rate, says Brown of Countrywide.
Most refinancers choose a no-points loan--partly because the prepaid interest on mortgage refinancing is not immediately tax-deductible as it is on a home-purchase loan. You have to deduct them over the life of the loan. Most refinancers simply add the fees to their new loan balance and pay the loan off over time. Some lenders do offer a no-cost loan, but you pay a slightly higher interest rate.
Fees cover such services as document preparation and notarization, title insurance and paying off the old loan. You must make sure you're getting a mortgage refinancing rate on your title insurance, which could be half the cost of a brand-new policy. You may be able to use an existing survey and save on that cost, too.
If your home's value has appreciated since you bought it, either because of rising property values or because you have renovated it wonderfully, you may have equity worth 20% or more of the value. If so, you won't need private mortgage insurance on the new mortgage. It's possible to keep a home-equity line of credit in place when you get a mortgage refinancing. But if your home-equity interest rate is prime (8%) or above, you'll save money rolling the balance on your home-equity line of credit into a new first mortgage lower than 7%. Some lenders will hesitate if you don't have at least 25% equity left in the home after taking out cash to pay off the home-equity loan or another loan. But others will let you take cash out with only 20% equity.
The article is from creditloan.com
How to apply for a mortgage refinancing?
There are so many mortgage refinancing deals available from banks and non-banks, it can be difficult to choose the right one for you. You can use the enquiry form to apply and letting an expert get you the best deal.
Remember it is FREE to apply online through firstloans.com.au.
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