Mortgage Refinance – Tips For Reducing Home Loan Payments

Mortgage refinancing offers the opportunity for homeowners to minimise payments on home loans or receive cash from accumulated home equity. Homeowners should become aware of the different choices and compare interest rates and closing costs of different lenders prior to refinancing mortgage notes.You can get additional information at North Strathfield Mortgage Broker Association.

The first phase in mortgage refinancing requires borrowers to check their existing documentation for home loans. When loans are repaid before the contract ends, the majority of housing loans carry prepayment fees. Homeowners carrying a first and second mortgage could incur major costs that negate the refinancing savings received.

To compare existing home refinancing interest rates, borrowers should perform research. When interest rates drop by 2 percent or more than the interest paid on original loan papers, mortgage lenders consider entering into mortgage refinancing.

To create a new home loan, homeowners involved in mortgage refinancing are needed. Funding is used to pay down first and second mortgage outstanding balances. Both loans may be merged into refinanced mortgages by borrowers holding two or more home loans and meeting lending requirements.

The first refinancing phase includes submitting a new application for a loan. In general, borrowers are expected to pay loan application, origination and settlement costs. Usually, refinance closing costs vary between 3- and 6-percent of the principal amount and interest outstanding.

Borrowers who are looking to refinance first and second mortgages are frequently surprised to find that they are liable for new home loan prepayment penalties along with refinanced mortgage closing costs. Those costs can add up to several thousand dollars quickly.

Eventually, lower interest rates will save homeowners more than the expense of fees for home refinancing. Loan origination can, however, be a costly upfront expense for refinanced loans.

Some banks offer no refinancing for closing costs. The reality is that there is no such thing as loans at no expense. Instead of paying upfront refinance closing expenses, the payments are included in the balance of the principal sum. For the length of the mortgage note, homeowners pay interest on closing fees.

Generally, refinanced mortgages extend repayment periods. If borrowers have 20 years left on their current note and are refinanced into a 30-year loan, an additional 10 years will be added to their loan. To compare long-term savings, it is important to determine the true costs before entering into a refi mortgage agreement.

Multiple developments have occurred within the lending industry in recent years. To assess if entering into a new home loan is a financially sound choice, homeowners must consider the benefits and drawbacks of refinancing.

Via their website at, the Federal Reserve Board offers various tools and customer guides for refinancing. Worksheets for home loan refinancing, eligibility requirements, lending services, and communications with the federal agency are available at no charge.