How To Go About Mortgage Refinancing

When the time comes to think about a mortgage refinance, you can be overwhelmed with options. Let’s face it, chances are you are considering a mortgage refinance option because of some changes in your life. Perhaps it is a happy change when you can pay down your mortgage. Perhaps it is a less than happy change when you need your mortgage payments lowered because of sudden ongoing expenses or loss of income. There are dozens of reasons why you might want to refinance your mortgage.

The underlying purpose of a mortgage refinance is to get rid of your existing mortgage and start over with a new mortgage. The reasons why you want to do this can be based on simple math – the interest rates have dropped significantly. Even with the costs of refinancing a mortgage, the new rates might be low enough to be financially beneficial in the long run. Another simple math factor could be to use the equity in your home now. If you refinance for a larger amount than your current mortgage and take the extra out as cash.

Even happy changes can be unsettling, so there you are with decisions to make and at the same time you need to consider all your options. After all when you refinance your mortgage you’re making a long commitment to a new deal. And there’s all the fine print to consider. So how do you go about refinancing your mortgage?

You can simply go to your current mortgage holder and ask what they can do for you or you can go to a mortgage broker and let them do the shopping around for you. The other option is to do your own shopping around.

Whichever way you choose, it is worth it to take a quick look at Lending Tree to see what they offer. If nothing else, you will be able to see the process of carrying out a mortgage refinance. I like Lending Tree’s motto which is "When Lenders Compete, You Win." This is at the crux of carrying out a refinance. You want to have lenders vying for your business rather than have you begging them to work with you. When you are in the driver’s seat, you have control.

The main question you need to answer is: How long will it take to breakeven on a mortgage refinance? The contributing factors to the answer to this question are your current interest rate, the new rate, closing costs and the length of the mortgage that you now have and the length of the mortgage refinanced.

If you look at the answers to these questions, you will know immediately which is the best option to take. There is no point in a mortgage refinance that does nothing to change your current or future cash position. If the mortgage refinance leaves you with the same payment but over a shorter period of time, that is good. If the mortgage refinance gives you access to a lump sum of needed cash but does not put extra strain on your cash outflow over time, that is good.

The main aspect to keep in mind is that a step as big as this needs to be considered calmly and logically. Once you have decided that this is the step to take, then you need to talk to a mortgage broker such as Lending Tree to see the actual numbers in terms of interest rates, monthly payments, and flexibility that are available. At that point, you can check with your current mortgage holder to see how their offer compares. Remember, the bottom line is that you come out ahead in the deal.

Mortgage Refinance
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