Monday, March 23, 2009

Tips to Cut Costs in Refinancing

If you are thinking of refinancing your mortgage, you should get in touch with a good mortgage broker or find a local loan officer to get you a new deal for yourself. Go to this worldwide mortgage directory to find one in your area. Before you try and get a profitable deal, read the tips below to help you save money using these cost-cutting strategies:

1.) If you don’t already notice it, a big portion of your monthly mortgage payment goes towards the interest. People who refinance usually do so because they found offers with attractive low interest rate. But you should also know that you can save even more money if you shorten the payback term. However, shorter payback term usually means bigger monthly installments. To make sure you get the best deal, compare refinance rates from several mortgage lenders before making any decisions.

2.) Mortgage lenders usually charge a higher interest to borrowers with bad credit report. So before you even try to apply for a refinancing, do everything you can to fix your credit. Closing your open credit cards is one option. If you choose to do so, make sure that your new credit report states that your accounts were closed because of your own request and not because of your credit history.

3.) Paying “points” can also lower the interest rate significantly. In the long run, doing this will save you thousands of dollars. But if you are planning to move only in a few years, do not opt for this kind of strategy.

4.) Another way to save money on refinancing is to stay clear from Private Mortgage Insurance. Insurance policies such as these will cost you hundreds of dollars every year. It saves more money by paying more initially in down payment and/ or borrowing less than 80% of your home’s value.

5) Analyze the fees that your mortgage lender is asking you to pay. Refer to the list of standard fees issued by the Department of Housing and Urban Development.

Thus, using a few simple tactics, you can ignite a lot of money for yourself over a long term. If you follow the above strategies sincerely, let me assure you that you will be able to save enough to free yourself from all debts and also have your own house in future.

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