In times of falling interest rates, it is advisable to refinance home loans or existing mortgages, which lowers your interest expenses and gets you a competitive deal in terms of lower additional costs from a rival mortgage provider. However, you should be careful before deciding on refinancing your home. Here are five ways to get the best deal on home refinancing:
- A lower mortgage rate might not lead to real savings – the interest rate is only one component of the overall cost structure in a mortgage deal. Before deciding on the refinancing deal, you should compare all the factors of your existing loan and the home mortgage refinancing offer.
- Many mortgage lenders promise to offer no-cost refinance loans, where they claim to provide home loan refinancing without any additional expenses. However, very few lenders actually refinance your loan at no cost. The others generally increase the interest rates to make up for additional costs. You should carefully compare various no-cost refinancing offers to select the best available deal.
- It may help you get a better deal on refinancing if your credit score has improved since you took the existing home mortgage loan. Get a fresh credit report and submit the report with your application for home mortgage refinancing. You can also get your loan repayment period changed with a refinancing deal. But compare the overall cost structure again if you are opting for an increase or decrease in your loan tenure under the refinancing deal.
- In cases of mobile home refinancing, it is more difficult to get a good deal. The rates of financing are generally higher in the case of manufactured or mobile homes. In most cases, you can get a better deal if the manufactured home is less mobile. Land value is not included in the cost of mobile homes, so the interest rates for mobile home purchases are higher than the mortgages.
- At times, the prime lending rates dip below the average rates offered in long-term fixed mortgages. In such cases, you can also consider refinancing a home equity deal, rather than home mortgage refinancing deals. The absence of existing mortgage closure costs also makes refinancing home equity deals more attractive than mortgage refinancing. However, you should decide on a refinancing home equity deal only after a thorough comparison of all the offers available.
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