I am currently with Citimortgage and I’m thinking about re-financing my condo.They do charge a one-time non-refundable processing fee of $635.00.Is that a decent price or are there better deals out there and what lenders don’t charge a closing fee (if any)? Any recommendations?
Overview
A home mortgage refinancing is an option open to homeowners with equity in their home that is accessible in the form of cash. Homeowners can obtain a loan which essentially means the amount of equity that is in their property can be removed in the form of cash or payoffs of debts. The additional equity funds are usually borrowed at a lower interest rate, similar to the interest rate paid on the home. This loan replaces the high interest credit card debt that would otherwise be paid. Another reason to refinance the mortgage is pay a lower monthly payment on the existing loan.
Pay off debts
Sometimes small debts add up. Maybe you purchased a new appliance on a store card when the old one broke down. You may have had to put a tooth extraction on your credit card. You took a trip to the Bahamas and spent more than you planned on food and entertainment while there. Whatever the reason, you find that your credit cards are all maxed out and the penalties and late fees are costing you hundreds of dollars each month. Some home owners use a drastic plan called home mortgage refinancing in order to pay off a number of outstanding debts that create stress each month when the income won’t cover the outgo for these bills.
Put your child through college
Another great use for the cash you can obtain by a home mortgage refinancing is to educate your children. College bills are overwhelming today and in order to avoid starting off a career with thousands of dollars in college debt, many homeowners are accessing the equity in their homes to pay for the education of their children. The interest rates are equivalent between a student loan and a home equity loan, so either method is a benefit to your education debts.
Take a vacation
Sometimes you have planned a scrimped for a vacation of significance for years and it just hasn’t come together for you. If the children have all left the nest and your business is doing well, a month long cruise in the Bahamas may be just the thing to start on the new phase of your life. Obtaining home mortgage refinancing through borrowing against the equity in your house to pay for your vacation is certainly less expensive than putting the costs on a credit card. If you shop for a better interest rate, you can even end up with a lower monthly payment than you were previously paying.
Remodel your home
Another good use for the cash you obtain through home mortgage refinancing is to remodel or renovate your home. Perhaps you need new carpets or a better room. The kitchen may look dated or you might have your heart set on adding a pool or a 3rd bathroom off the family room. If you use the equity in your home, you can often access the cash to do these projects with very minimal effect on your mortgage payment.
More and more people are opting to get a new home mortgage to replace their existing ones. This should not be surprising considering the potential for getting better deals when you refinance your loan. You can lower your interest rates to a favorable extent, and you can save up quite a lot to pay off your principal sooner than if you still with your existing loan.
However, some people still choose to wait it out or look for the right timing before they jump right in and get some mortgage refinancing. This is primarily because interest rates have seemed to slowly increase in the recent years, and home owners who refinance seem to face the risk of getting even higher interest rates later on. So the question still remains, should you refinance or not? Should you get a new home mortgage now or wait a little more for a better time?
For the longest time, the 2% formula in refinancing has been believed by many people. It basically says that home owners should only refinance if they can improve their current interest rate by at least 2%. Nowadays, this formula may not be the rule of thumb any longer. Today, the points (sometimes including the fees) you pay at closing are just as important as the interest rates. Normally, the more points you pay, the lesser the interest rates, and vice versa.
When is it a great idea to refinance? Well, to be specific, it is best to refinance if you can improve your interest rate at very little, or no cost at all. No fee, no point loans have been very popular in the recent years. So, if you qualify for such, then you will surely get a great deal when you get a new home mortgage. It may also be wise to refinances if you have a balloon payment due soon. This can naturally be catastrophic if you do not have any other option to cover your debt, except your home equity. (If you need to tap right into your home equity, make sure you do so for the right reasons.) In addition, it is wise to get a new home mortgage and change into a fixed rate mortgage if you have an adjustable rate loan which is just about to spike up.
When is it not great to refinance? If you have stuck with your loan for quite a while now, say more than half-way to your mortgage terms, it may not be a good idea to get a new home mortgage. This will only re-extend your terms and may only cost you more. A pending pre-payment penalty on an existing loan or a maxed out home equity loan or credit line are not great reasons for a new home mortgage, so try not to put yourself at even greater risk. Furthermore, if your credit rating or score has recently gone through a hit, try not to refinance soon as you may not get the best market rate that you are aiming for.
In order to buy and sell homes successfully, you need to know all you can about your Ohio home mortgage and decide which one is best for you and your needs. There are several to choose from and each one can be beneficial depending on your personal set of circumstances. Always be sure to deal with a reputable bank or company when performing such an important financial transaction.
Fixed Rate and Adjustable Rate
The terms fixed rate and adjustable rate mortgage loans refer to the two most common Ohio home mortgage options. Fixed rate home mortgage loans can be set up to extend for 15 or 30 years and sometimes conventional balloon mortgage loans fall into this category as well. The benefit to fixed rate loans is that your interest rate is locked into place and can’t be changed throughout the life of the loan and you will never have to be concerned with a sudden hike in your house payments and interest rates.
An adjustable rate loan may be just want you need for your Ohio home mortgage loan as it has the bonus of the interest rate fluxuating to match the current lowest interest rate. As unfortunate as it is when the interest rates go up and your rate continues to match it, you will have the added benefit of paying less than a fixed rate on average over the life of the loan. Your financial needs and amount you can pay on a home mortgage will have a lot to do with whether you choose a fixed or adjustable interest rate for your Ohio home mortgage.
Other Types of Home Mortgage Loans
Another possible way to go with your Ohio home mortgage is with a jumbo loan. That doesn’t refer to a huge amount of money; rather it is a loan that does allow for the borrower to receive money than regular conforming loans limits. These types of loans can be either set up with fixed or adjustable rates.
Finally, depending on your circumstances a VA home loan or FHA loan may be in order. Current or past military personnel may qualify for a VA loan and save money using their government benefits. An FHA loan is usually good for citizens looking to purchase their first home and is backed by the Federal Housing Authority.
Deciding on your Ohio home mortgage is a step away when you take the time to carefully analyze all of your options and make the right decision for your personal set of circumstances.