Ravi Chandran
Refinance mortgage loan as it may be useful for you – both immediately and in the long term
Refinance mortgage loan may be useful for several reasons
There are many reasons that a refinance of your mortgage loan may be useful for you – both immediately and in the long-term. One major reason why many refinance, is to improve their cash flow in the here and now.
You can lower your interest rate by choosing a mortgage rate which offers a better rate than you currently have. You can also consider lowering your payment by stretching out your current balance over a new term, but you must be mindful that age restrictions may apply. And if you do that, you should take heed that it may take longer to pay off your loan.
Even if you monthly payment drops, do keep in mind that the longer you take to clear your mortgage loan, the more interest you will have to pay over the life of the loan. This is the trade-off you have to make between immediate savings and long-term costs.
But if you choose to refinance, you can always choose to accelerate your repayment as your finances improve later in life. There are several reasons why homeowners may think they don’t qualify for a refinance for lower payments. One main reason is, they may believe that their mortgage balance is higher than the current market value of their properties that secures it. The other big reason being, their believe believing that their credit score is bad and won’t qualify them to refinance.
If you refinance to a lower rate, the chances are high that you will end up with a smaller payment. In fact, you can usually refinance for lower payments even if you get a higher rate. That is because in most cases, you will have reset the clock on your mortgage.
Refinance mortgage loan must be considered by homeowners because interest rates are always changing and the current rate environment is a good one to switch loan.
A mortgage — whether it’s a home purchase, a refinancing, or a home equity loan — is a product, just like a car, so the price and terms may be negotiable. You’ll want to compare all the costs involved in obtaining a mortgage. Shopping, comparing, and negotiating may save you thousands of dollars.
Obtain information from several lenders to get the best home finance with 1.04% interest
Home loans are available from several types of lenders including banks and financial institutions. Different lenders may quote you different prices, so you should contact several lenders to make sure you’re getting the best price. You can also get a home loan through a mortgage broker. Brokers arrange transactions rather than lending money directly; in other words, they find a lender for you.
A broker’s access to several lenders can mean a wider selection of loan products and terms from which you can choose. Brokers will generally contact several lenders regarding your application, but they are not obligated to find the best deal for you unless they have contracted with you to act as your agent.
A mortgage broker could be your best bet in finding that best home finance deals home loan with 1.04% interest
Obtain all important cost information even when you get that best 2021 home loan with 1.04% interest
Be sure to get information about mortgages from several lenders or brokers. Know how much of a down payment you can afford, and find out all the costs involved in the loan. Knowing just the amount of the monthly payment or the interest rate is not enough. Ask for information about the same loan amount, loan term, and type of loan so that you can compare the information. The following information is important to get from each lender and broker:
Rates
- Ask each lender and broker for a list of its current mortgage interest rates and whether the rates being quoted are the lowest for that day or week.
- Ask whether the rate is fixed or adjustable. Keep in mind that when interest rates for adjustable-rate mortgages go up, generally so do the monthly payments.
- If the rate quoted is for an adjustable-rate mortgage, ask how your rate and loan payment will vary, including whether your loan payment will be reduced when rates go down.
- Ask about the loan’s annual percentage rate (APR). The APR takes into account the interest rate, broker fees, and certain other credit charges that you may be required to pay, expressed as a yearly rate.
Fees
A home loan often involves many fees, such as loan origination or underwriting fees, broker fees, and settlement (or closing costs). Every lender should be able to give you an estimate of its fees. Many of these fees are negotiable. Some fees are paid when you apply for a loan (such as application and appraisal fees), and others are paid at closing. In some cases, you can borrow the money needed to pay these fees, but doing so will increase your loan amount and total costs. “No cost” loans are sometimes available, but they usually involve higher rates.
- Ask what each fee includes. Several items may be lumped into one fee.
- Ask for an explanation of any fee you do not understand. Some common fees associated with a home loan closing are listed on the Mortgage Shopping Worksheet.
Down Payments and Private Mortgage Insurance
Most lenders require 25 per cent of the home’s purchase price as a down payment. 5 per cent of this down payment has to be in cash and the rest can be paid using your CPF.
- Ask about the lender’s requirements for a down payment, including what you need to do to verify that funds for your down payment are available.
- Ask your lender about special programs it may offer and private mortgage insurance.
Today, consumers have a wide range of home loan packages to choose from compared to several years ago. Home loans could also be tied up with other programmes which rewards customers with a higher interest rate on their deposits if they transact more with the bank, such as getting a home loan and crediting their salary with the same bank.
Typically, with mortgage loans you are offered attractive rates for the first three years when you refinance – following which the interest rates are adjusted upwards. This usually coincides with the end of the lock in period, offering borrowers a good opportunity to relook their loans.
Good affordability calculators will also come in handy for homeowners looking to refinance as they can use it to determine how much loan they qualify for. You can also use mortgage payment calculator to determine how much you would have to pay every month by taking a mortgage loan with a 3-year lock-down period.
