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Popular opinion suggests that financing a property is the hardest part of home ownership. As it turns out, however, this doesn't always hold true. Most real estate loans Brooklyn New York remain fixed to a large extent, but the same can't be said of borrowers' needs. If that sounds familiar, it's well guaranteed that you'll need to reassess your financial situation going forward. This could involve refinancing your mortgage, a process that can be packaged in 2 ways:
Rate-and-term Refinance: This is by far the most common type of refinance. Simply put, it involves switching to a mortgage that has better terms and/or a lower interest rate. It's worth noting that with the exception of loan fees, money hardly ever changes hands in this case.
Cash-Out Refinance: As the name suggests, this involves borrowing more money on top of the existing mortgage. It's thus fair to say that this is a way of converting equity into cash. There's nothing wrong with that per se, but it's what makes cash-out loans be priced higher than other alternatives.
Industry opinion suggests that refinancing only makes sense if there's a potential to lower one's interest rate by at least two percentage points. Other than that, it usually takes about 3 years to realize fully the savings resulting from this reduction, given the cost of taking out a refinance. Be sure to weigh these factors when figuring out your next move. That aside, the process will be easier when you know what steps you'll need to take:
Watch Your Credit: Lenders will use this (among other factors) to ascertain your eligibility for mortgage refinancing. This creates the obvious need to review your credit status as soon as you can. Of course, you'll want to ensure that there are no errors therein. Most importantly, all your inquiries should take place within a two-week period to lessen the impact on your score.
Shop for Lenders: It's tempting to think that the best refinancing package will be presented by your current lender, but this isn't necessarily the case. Chances are that there's a better option available on the market, so it's in your best interest to shop around for offers. The latter can also be said of seeking as much clarification as possible when interviewing lenders.
Apply for Refinancing: It's not until you find the best loan package that you can start filling out application forms. This will of course involve providing lots of financial information supported by appropriate documents. A high level of preparation in advance will translate to a smoother application process.
Get Your Rate Locked: It can take up to 60 days for an application to go through processing and approval. Remember that the rate you were originally quoted can change subject to market fluctuations that occur over this period. This can however be avoided by getting a rate lock in advance.
As always, you'll want to know what it is it is you're getting into before taking out a refinance. Also be sure to weigh your current position against where you'll be after the deal is finalized. Similar to any other investment, refinancing will only make sense if it helps you fulfill your objectives.
Rate-and-term Refinance: This is by far the most common type of refinance. Simply put, it involves switching to a mortgage that has better terms and/or a lower interest rate. It's worth noting that with the exception of loan fees, money hardly ever changes hands in this case.
Cash-Out Refinance: As the name suggests, this involves borrowing more money on top of the existing mortgage. It's thus fair to say that this is a way of converting equity into cash. There's nothing wrong with that per se, but it's what makes cash-out loans be priced higher than other alternatives.
Industry opinion suggests that refinancing only makes sense if there's a potential to lower one's interest rate by at least two percentage points. Other than that, it usually takes about 3 years to realize fully the savings resulting from this reduction, given the cost of taking out a refinance. Be sure to weigh these factors when figuring out your next move. That aside, the process will be easier when you know what steps you'll need to take:
Watch Your Credit: Lenders will use this (among other factors) to ascertain your eligibility for mortgage refinancing. This creates the obvious need to review your credit status as soon as you can. Of course, you'll want to ensure that there are no errors therein. Most importantly, all your inquiries should take place within a two-week period to lessen the impact on your score.
Shop for Lenders: It's tempting to think that the best refinancing package will be presented by your current lender, but this isn't necessarily the case. Chances are that there's a better option available on the market, so it's in your best interest to shop around for offers. The latter can also be said of seeking as much clarification as possible when interviewing lenders.
Apply for Refinancing: It's not until you find the best loan package that you can start filling out application forms. This will of course involve providing lots of financial information supported by appropriate documents. A high level of preparation in advance will translate to a smoother application process.
Get Your Rate Locked: It can take up to 60 days for an application to go through processing and approval. Remember that the rate you were originally quoted can change subject to market fluctuations that occur over this period. This can however be avoided by getting a rate lock in advance.
As always, you'll want to know what it is it is you're getting into before taking out a refinance. Also be sure to weigh your current position against where you'll be after the deal is finalized. Similar to any other investment, refinancing will only make sense if it helps you fulfill your objectives.
About the Author:
You can find an overview of the advantages you get when you take out real estate loans Brooklyn New York companies offer at http://www.amerimaxcapital.com/about-us right now.
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