Ideal Way To Refinance Your Home Loan
July 3, 2008
If you’re in the market for a home mortgage refinance loan, there are lots of things you need to know to avoid overpaying. Careful comparison shopping will help you avoid 90% of the mistakes homeowners make when refinancing their mortgage loans. Here are several tips to help get you started with a home mortgage refinance loan.
Mortgage with fixed interest rates are the traditional mortgage your parents had when they bought a home. Fixed means the interest rate does not change for the duration of your mortgage. If you need minimal risk and a monthly payment amount you can plan your budget around, a fixed rate home mortgage refinance loan could be right for you.
A hidden fee you need to watch out for is called Yield Spread Premium. This is the retail markup of your mortgage interest rate by the Mortgage Company or broker. When you apply for a home mortgage refinance loan, the wholesale lender that approves your application qualifies you for a certain interest rate. This wholesale lender gives your Mortgage Company or broker a written guarantee of that interest rate. The written guarantee you receive is rarely the same one from the wholesale lender and includes Yield Spread Premium.
The next fee to locate on your Good Faith Estimate is the home mortgage refinance loan processing fee. Do not pay more than $400 for loan processing anything more and the mortgage company is gouging you with the processing fee. Lastly, look for anything on the home mortgage refinance loan Good Faith Estimate that resembles a broker origination or courier fee, application fee, loan submission fee, or lock fees. These are mortgage company junk fees that you should never agree to pay.
Adjustable Rate Mortgages typically come with lower interest rates than fixed interest rate loans and mortgages with shorter term lengths come with lower rates than longer mortgage loans. Not every type of home mortgage refinance loan is right for each financial situation. Choose the wrong type of loan and you could overpay thousands of dollars and possibly even lose your home.