Helpful Mortgage Refinance Loan Tips

Many people get a mortgage loan, but they just make the payment every month without ever thinking that there are ways to save money. Discussing a mortgage refinance with your lender can help you save a little money each month on your mortgage payment, which adds up to a lot of money over time. So, how do you know if you should consider mortgage refinance?

1. Wave those fees
One consideration you need to make when thinking about mortgage refinance is that a small rate cut can bring you a fast pay off. Many mortgage companies today are waiving refinance fees for things like application, appraisal, and legal fees. The savings can add up to between $1,500 to $3,000. However, be careful of how much you will save in the outset and balance it by how much more you will pay overall. Sometimes companies will not give you the lowest mortgage refinance rate when they waive your fees.

2. Points Options
You may also want to consider paying points if you are planning to stay in your home for more than three years. A �point� equals one percent of the amount of the loan. If you pay points and closing costs, you will most likely get the lowest rate available.

3. Adding Points
Another option with mortgage refinance is to add the points and closing costs to your refinanced mortgage. You may only want to consider this option if you have had your mortgage for over three years, because then you have already lowered your mortgage by quite a few thousand dollars. This way you may add on the extra fees with points and closing costs, but your overall mortgage will still be smaller than before. With a new rate and a smaller total loan amount, your mortgage refinance will reap you a smaller payment each month.

Money Saving Tip #3: Pay Additional Points
A good way to save money on your monthly payments, even when you refinance your mortgage, is to pay extra points. If you pay extra points you can possibly get a lower rate on refinancing your Arizona home. This may work well especially if you have borderline credit. The lower interest rate will also save you money in the long term.

4. Good Rule of Thumb
As a rule of thumb, you should only consider mortgage refinance if your new mortgage will be at least 2 percentage points below your current rate. The exception to this general rule is when you are able to get a mortgage refinance that waives fees. With these low cost, or in come cases no cost, refinance program, it may be worth it to refinance with just a little smaller lowering of interest rates.

In the end, your total cost for mortgage refinance will be dependent on your interest rate, points, and other costs. Therefore, it is important that you shop around to find out which mortgage refinance program will work best for you. Do your research into each company to make sure that they are financially sound and provide good customer service, too. Then take advantage of the mortgage refinance programs to save you money each month on your mortgage payment.

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Lender Offers Tips for Those Looking to Refinance

The Federal Reserve's decision to cut a key interest rate this week was designed to help jolt the sagging economy. It remains to be seen just how well — or how quickly — it will work.

But the rate cut did prompt an immediate burst of activity in the mortgage market. Across the country, mortgage brokers reported a deluge of calls from people wondering whether it was a good time to refinance.

Russell Rothstein, the director of mortgage lending for Beacon Mortgage in Rockville, Md., was one of the people fielding those calls. He tells Michele Norris that a Fed cut to short-term interest rates doesn't always affect long-term interest rates, but the bond market reacted positively to the surprising three-quarter-point drop at first and mortgage rates did go down.

"We saw rates on Tuesday drop from around 5 7/8 percent to around 5 3/8 percent, but then once the market settled down, we actually saw mortgage rates settle back up into the 5 3/4 to 5 7/8 range in the past day," he says.

Even though the rates have rebounded, Rothstein says it could still be a good time to refinance.

"What people have to look at is there is no one specific good time; they've got to look at their individual situation," he says. "Maybe they thought they were going to be in their home for three to five years and now with the values of houses having come down some, they're going to end up staying in their house longer and they want the security of a fixed-rate mortgage."

But he cautions that for those who plan to sell their homes in the next year or two, refinancing may not make financial sense.

"If your payments are going to go down, but the amount that you're going to save is not going to recoup the cost of the refinance, that's where you have to do a break-even analysis," he says. "On the other side, if you have an [adjustable-rate mortgage] that's coming up for renewal right now, even if you're only going to be there for two years — [it] depends how high your rate could go to — then you look at difference in payments."

For subprime borrowers who are carrying mortgages that are worth more than the value of their homes, Rothstein recommends going back to the existing lender.

"They don't want to foreclose; they don't want your property. … They want their payments, and maybe you can restructure your loan," he says. "With rates having dropped down, it is possible that they may do a loan modification for you and change the terms of it, so that you could afford to stay in your home. You know, everyone thinks that the big, bad lenders want to come and take their homes. The lenders don't want the homes. The lenders want you to be able to make your payments."

Some homeowners who are not subprime borrowers but are struggling to meet their payments could benefit from going back to their lender or shopping around, Rothstein says.

"There are people out there who took adjustable-rate mortgages where the rate is adjusting to higher than what a fixed-rate mortgage is today. So that's an opportunity to either go back to their current lender or to check what's out there in the marketplace. It's very competitive today between lenders," Rothstein says. "And it's important to check who has the best rates, but not only the best rate, because the best rate doesn't always mean the best mortgage. You have to make sure the terms and the closing costs — the entire package — makes sense for you."

Rothstein says it's possible that mortgage rates will soon dip again.

"I think the industry is still expecting a half-percent cut [from the Fed], so I think the mortgage rates will settle down and there's a good chance that they can come back down further," he says. "And I think when people look at these rates, at some point they've just got to make a decision. You're never going to find the bottom of the market. At some point, you just have to decide 'this is where it makes sense for me,' and you have to at that point, you know, move forward."

Top 5 Home Mortgage Refinance Tips

All of us want to save money. I don't think I can name one person that I know of that is happy to spend more money than they have to, either on their personal bills or their mortgage. There has been so much talk in the market today because home sales have slowed so much about refinancing your home mortgage. This can either be a good thing or a bad thing depending on your own personal circumstances. Here are some tips to help you to know if you should refinance your home mortgage and how to know that you are getting the best rate.

1. Points or no Points - When it comes to lowering your rates you will need to weight the benefits of having a lower rate vs. paying points up front. You may end up paying a lot more depending on your choice and how long you plan on keeping your mortgage.

2. Sneaky Interest Games - Don't fall for the 0% apr unless it fits in with your master plan. A lot of brokers will try to get you locked into a low interest rate that will balloon on you in a couple of years and leave you out on the street.

3. Hidden Fees will Hurt You - If your new mortgage rate seems too good to be true then it probably is. Check for hidden fees in your mortgage that will make up that suspicious difference.

4. Have Faith - You have a legal right to a good faith estimate. Get a copy of this document and go over it with a fine tooth comb, it will reveal where there is a real problem.

5. Start the Clock - Weigh the costs carefully of how long you will be staying in your home vs. how much of a savings you will be getting in a refinance. Make sure you include closing costs in your decision.

Tips For Consumers Refinancing Their Home

While it typically takes about 45 days from the time of application to get to closing, delays of two months or more can occur. Look for a lock-in that lasts for 60 days or more. There should be some lenders in your area willing to offer a 60 day "lock-in" for free.

Be careful, however. The loan officer may say the lock-in is free even when a fee or a higher rate is charged for the lock-in protection.


If your deal turns sour at closing, consider starting over. You have three business days from the date of closing to mull it over. If you decide to reject the deal, you must notify the lender in writing within the three-day period. The lender then has 20 days to return your fees.


Many lenders require that you have at least 10 percent equity in your home (i.e., a loan-to-value (LTV) ratio of 90 percent or less). But we found at least one lender in every market that was willing to underwrite loans in which the borrower had only 5 percent equity in the home. Beware, however, that low equity loans can involve relatively high mortgage insurance costs.

You may only qualify if your current loan is owned by Fannie Mae or Freddie Mac. You can find out if your loan is owned by these organizations by calling the company to whom you send your monthly payments. That company may not own the loan, but it can find out whether the secondary market agencies do by searching a computerized database.


Make sure you compare interest rates using a constant number of points. An 8 percent rate tied to 2 points is a lot more expensive than an 8 percent rate tied to 0 points.

When faced with the need to compare different rate/point combinations among lenders, consumers should first convert each quoted rate to one based on a constant number of points and then find the lender with the lowest rate. In making this conversion, consumers should use a traditional rule of thumb that equates each point to a 1/4 of 1 percent change in the interest rate. This would make an 8 percent loan with 0 points equivalent to a 7.75 percent loan with 1 point.


Lenders who lure you with no costs at application can lay the fees on heavily at closing. Keep your eyes focused primarily on the interest rate and points.