Print Article for : When To Refinance A Home

Your Online Guide » Guide to Finance » Managing Cash Flow

[W640]When To Refinance A Home

by Info Yogis, Inf

If you read it correctly, that is close to a million dollars.

There are many people reading this article who are not aware that the decision they are taking now is the best. How many people reading this article just went to the first bank, building society or broker and asked for a home loan without knowing that the decision you make at this stage could prove to be the difference between paying out $916,000 and, say, $700,000?

In Victoria where the average home loan is $260,000 the figures are around $680,000 to pay out the loan and with the right advice you could reduce your total payments to around $370,000.

You have all seen the half baked guru's on television telling you that by paying just a little more you can save a lot. We are talking about paying less each month as well as making the savings we refer to above. That's a double whammy winner in any language.

By now you should be questioning whether you are going to boost your bank's profit margin or choose to reduce your own payments. This choice is yours to make if you are serious and get the correct advice and how to do it.

The biggest advantage to have come with the freeing up of the Australian home loan industry is that there are brokers out there who are prepared to tell you, and show you, everything the big banks would feel happier that you didn't know. We are pleased to have many of these brokers on our approved panel.

At this stage it is best that we make you aware that the type of loan we are discussing in this article will not be available, or suitable, for everybody. The good news is that if it is not for you right now it will almost certainly be for you in a few years when you have built equity in your property and a good broker is able to put you into a loan that will enable you to transfer to this type of loan without penalty at some later date.

While walking your dog, you may have seen rows of houses for sale. You want one of those brick houses with three bedrooms to accommodate a growing brood of kids. The possibility is not remote if your home's value has increased considerably. A refinance home scheme may let you enter one of those bigger homes.

Ready to Jump Through Hoops?

For your first mortgage, you had to undergo a paper chase to satisfy the requirements of the mortgage company. This experience will serve you well. But for your refinance home project, there are still some do's and don'ts to observe to give yourself the upper hand when entering a contract.

So check your documents. Are your tax income papers in order? Is your credit history satisfactory? Is your employment record updated? Are the records of the first mortgage complete and neatly filed? These are just some of the documents to prepare. Looking for lost documents or calling up certain offices for your records eat up your valuable time just when the refinance home loan agent is ready to talk to you.

When you're ready for an audience with the loan agent, make sure you've done your homework. You should know about mortgages before signing a contract. One simple rule is: don't rush into a refinance home loan.

The Do's

Find out about your home's value. If this has increased, expect to pay more for the mortgage. But settle on a company that offers a lower interest rate than your present mortgage. The new loan should be able to give you 2% less in interest rates than your current loan.

Do shop for lower interest rates. You may be surprised that an adjustable mortgage rate is lower than a fixed mortgage rate. The catch, though, is the possibility that your monthly bills might shoot up. Consider this if this is not a risk.

Do ask about penalties for loan prepayment and getting out of the contract. The loan agent should make it clear that you have the right to rescind the contract within three days, which is the rescission period.

Do make sure that if you're going to resort to this option, let the refinance home company know of your decision and your reasons through a formal letter followed up with a telephone call to the right people before the 12PM deadline on the third day.

Do check the company's background if you're using a new mortgage company. With several mortgage companies competing for business, you might fall for a lousy deal with the lure of very low interest rates and no closing fees.

The Don'ts

Don't be rushed into a home refinance loan, and don't be afraid or intimidated by the mortgage companies. Check out online sites that provide information on consumer rights.

Don't entertain calls purportedly coming from companies requesting more information. Go to the company office. Inform them of the request for additional information and verify if indeed this request came from them.

Don't entertain strangers offering a better deal and cash even if they give their credentials. Tell them you prefer to discuss things in their office. Don't sign anything. Some people lost their homes to scammers because of those nice strangers.

These tips can help you safeguard yourself from getting duped into dubious deals. Your new loan should be your chance to own a home, not lose it.

Article Source : Quick Loans Bad Credit

About Author

Both Info Yogis & Rony Walker are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Info Yogis has sinced written about articles on various topics from Religion, computers and the internet and Affiliate Programs. This article is part one of a two part article and you can read part two now at: . Author David McCarthyCopyright 20. Info Yogis's top article generates over 2900 views. to your Favourites.

Rony Walker has sinced written about articles on various topics from Finances, Breast Cancer and Mortgage. For your ,. Rony Walker's top article generates over 165000 views. to your Favourites.