Mortgage Refinance

The phone rings, and the cheerful woman on the other end of the phone line begins to chirp the benefits of a one percent interest refinance. While this might sound like an amazing deal to many people, I politely thank her and hang up. The one percent loan is a half-truth at best. It is a myth that is carefully cultivated to ensnare those who are not in the know, and it works. Here’s how.

One percent mortgages are also interest-only, meaning that you don’t pay more than the one percent interest of the loan every month. Obviously, this means that if you are making the minimum payments, then you are not making any progress on paying down the loan. This is fine if you are buying a place just to turn around and sell it again, but not so great if you are trying to make it your own.

When you have decided that you may want to refinance your mortgage on your home, there are a few money-saving tips that you can observe to help you get the biggest bang for your buck. Before deciding to refinance your mortgage, you should seriously look at the reasons behind your decision and the overall financial impact of refinancing. There are costs that are included in refinancing, and in some cases, it can take years for the refinancing to pay for itself—if you are planning on moving in the near future and/or selling your home, the time it will take for the refinancing to pay for itself is a major consideration.

When you refinance your mortgage, there are some costs that are involved that can impact whether refinancing is a viable option or not. It’s important to take these refinancing costs into consideration when deciding whether it’s a good time to refinance as the costs can mean more expense than savings.

The basics of mortgage refinancing are that you pay off your original mortgage and sign a new mortgage with different rates. With the new mortgage, you will pay the same costs you paid at the lender that you did to get the original mortgage. These costs can include settlement costs, discount points and other administrative fees. If you are paying off your original mortgage early, there may also be a penalty to pay, although this practice is prohibited in some states. The overall expense of refinancing your mortgage depends on three factors: the interest rate, the number of points and the other, extra costs you are required to pay to get the new mortgage.