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[P629]Prequalify For Home Loan

by T. O' Donnell, T.

Nearly half of all mortgage applications are for remortgages. If you are considering remortgaging your home loan, here are some things you can do to get ready:

1. Check the current interest rates.

Traditional wisdom says you should remortgage your home if the interest rate drops at least two percentage points lower than your current interest rate.

However, if the current interest rate is only 1% or 1.5% less than your current interest rate, you can still save money over the term of your mortgage. You want your interest rate to go down by at least 5/8%, or you won't save enough money to be worth the cost of remortgaging.

2. Consider how long you plan to stay in your home.

The interest rate is not the only factor you should consider when deciding whether go for a remortgage.

Keep in mind how long you plan to stay in your home. You need to stay put long enough to recover the costs of remortgaging.

If your new interest rate is 1.5% less than your current interest rate, you generally need to stay in your home more than three years to make the remortgage worth the fees.

3. Check your credit rating.

Check your credit rating before you filling out any remortgage applications. If there are any problems with your credit, you can take a little time to fix them before proceeding. This is especially true if there are out-of-date or incorrect entries on your credit report.

It's a bit of a chore to send off the letters and keep up the correspondence, but if someone were to say they'd give you a grand to do it (i.e. the amount you might save with a better deal), you'd do it!

4. Check the value of your home.

You will need to have your home appraised. But for now, just check the selling price of similar homes in your area. Has the value of your home gone up or down since you bought it?

5. Decide if you want to use the equity in your home to get cash out.

If the value of your home has gone up, you can remortgage for a higher amount than what you owe, and get cash out for school, vacation, home improvements, or to start a new business.

For myself, I'd only use such money to set up something that would make money, or to fund a child's education; it's much better for your peace of mind to have low monthly outgoings than a fancy holiday or car.

6. Make sure you have cash to cover the refinancing costs.

You will have the same fees and expenses you did when you first purchased your home, including a home appraisal, closing costs, and other fees and points. Further, while you may be able to remortgage with no points or closing costs, your interest rate could be higher. And there is no reason to remortgage if you are going to end up with a higher interest rate!

7. Talk to lenders.

You should talk to several lenders to see what the current interest rates are and how much money you will need. Then figure out what your new payment would be if you remortgaged and how long it would take to recover the costs.

8. Adjust your mortgage term.

When you remortgage, you can take the opportunity to change your mortgage term. Maybe you originally took out a 15-year mortgage, but want to remortgage to a longer loan term so you can have more cash each month. Or (much better) maybe you want to reduce your mortgage term from 30 years to 15 or even 10, and get your mortgage paid off more quickly. Wouldn't that be nice?

A friend invited you to a party and you can't even refuse because this friend sent you boxes of raisins when you were down with diarrhea. It's time to return the favor and sadly, you're having such a difficult time mingling with the crowd. As the total klutz that you are, you can't even start a small talk to that beautiful lady that has been the subject of your eyes since you rode with her in the elevator five minutes ago. And there's this guy who's blabbering about some Colorado refinance home loan to you and you seem to even care less of the information he's giving you. But wait, this is just the thing that you might need to mitigate the back-breaking monthly bills that your previous lending company is sending you.

Small Talk Can Be Big

So you ask this guy – whose name is Schubert – of the things you need to do in order to avail of the Colorado refinance home loan. You were told that first you need to do is assess first if refinancing is the right package for you. Refinancing is recommended to clients who lived in their houses for more than seven years and they would like to reduce the monthly obligations caused by say, a 30-year fixed-rate loan. Your monthly payments can indeed be lowered down to almost 20 to 30 percent with a Colorado refinance home loan. In fact, lenders may even permit borrowers to pay off the initial loan interest rates only. You can now calculate your possible savings each year, when you take out 20% in your $3,600 monthly obligation. That's a whopping $720 each month and $8,640 every year! Clearly, you start to see why this small talk with Schubert will reap you big benefits in the end.

Small Talk and Meet Wendy

Then the lady you were eyeing overheard something that sparked her enthusiasm in your conversation with Schubert. So she sashayed into your table, sat beside you and introduced herself as Wendy. You realize this lady is having problems herself with her previous home loans too. The expensive monthly payments have hindered her to spend for the necessary repairs of her home. You then suggested that people who wanted to improve their houses have more to gain when they avail a Colorado refinance home loan. In this way, Wendy can refinance to minimize her previous loan, earn from the savings and she can use the extra money to finance the necessary repairs. These repairs will even raise the value of her property, which will translate into better credit ratings.

Eat Your Heart Out, Romeo

After some more discussion, Schubert reminded that people should be careful about choosing lenders. You should study the terms and calculate the charges to know that you are getting the best deal. Also, before grabbing a good Colorado refinance home loan, you should know that you could lose your right to refinance if you fall behind on payments. Before he left, you thanked Schubert for the information he shared. Of course, you also congratulated yourself for being interested in refinancing your mortgage. That's double peat luck for you, Romeo. You gained insights of how to relieve your payments from your previous loan and you met this beautiful lady Wendy because of this conversation. Who ever said you were a total klutz who hates parties like these?

Article Source : Buy To Let Mortgage Calculator

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Both T. O' Donnell & 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.

T. O' Donnell has sinced written about articles on various topics from . T. O' Donnell is a licenced credit broker based in London, UK.. T. O' Donnell's top article . to your Favourites.

Rony Walker has sinced written about articles on various topics from Finances, Breast Cancer and Mortgage. Want to know more about ? Visit WhatAboutLoans.com Now! You can also find out more about. Rony Walker's top article generates over 165000 views. to your Favourites.