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[R143]Refinance Your Mortgage With

by Tom Allen, Tom

Due to the fact that there is a huge amount of competition in the mortgage lender market, there are now several advantages to the consumer that did not exist a number of years ago. If your mortgage loan has been running for a good number of years then chances are you may not have gotten the financial product that suit your needs bests.

With all of this competition, there's never been a better time to look at refinancing your home and perhaps finishing up with a better set of conditions or a better rate than you got when you originally took at your mortgage. There are a number of things that you should bear in mind when looking into this. Firstly, if you have been making regular mortgage repayments for a number of years then you will have built-up a reasonably good credit rating on the back of this. Also, if you don't have any other outstanding debt in terms of additional loans or short-term credit then your credit rating should be excellent. This will be an excellent bargaining chip in terms of talking to mortgage brokers or directly to companies and being able to negotiate a lower rate and better conditions for your refinancing needs.

If you require additional money for home renovation or extension then there is also an opportunity here to build that additional money into your refinancing request and then spread it out over the longer term as part of your renegotiated mortgage.

Probably the first place to look is your existing company. Their financial product will have changed with the times and when you consider changing the terms of your mortgage then this is probably the first place that you should look. Because you've already built-up a relationship with them and have been paying regularly over an extended period of time they will be quite keen to keep you as a customer. This is a massive advantage in your negotiations with them and will allow you to leverage better conditions from the deal.

Also, it is no harm to shop around at this stage and see what other companies might offer you. You will also be able to use this information in the negotiations with your existing company and play one off against the other. If your existing mortgage financier is unwilling to offer you a competitive deal compared to what seems to be available in the marketplace than it is time to look at making a change. There has been all sorts of legislation in this area which will allow you to make this change quite easily. It has always been in the interest of the mortgage lenders to make it appear that changing from one mortgage lender to another is very difficult. This is actually not the case of when you look at this more closely will find that it is actually quite easy to change from one company to another.

Basically, the moral of the story is to always remember that the market is very competitive and if you have built up your equity and credit rating by keeping up regular repayments over a number of years that this puts you in a prime position to renegotiate your mortgage financing with your existing company or if they are unwilling to offer you the best terms then you can move to a different mortgage finance provider.

What's Involved in a Refinance?

With a mortgage refinance, you pay off your existing mortgage and take out a new mortgage at a lower interest rate.

Some financial experts advise that before refinancing you make sure that the equity in your home is at least 5% of the home's value, if your mortgage is insured. If your mortgage is not insured, your equity should be more than 20% of your home's value. Equity is the current value of your home, minus the amount outstanding on your mortgage. How do you figure out the equity? Here's an example:

* Ten years ago you bought a house for $250,000, with $12,500 down. You have paid $15,000 of the mortgage, leaving you a balance of $222,500 owing. Your equity would be $250,000 - $222,500 = $27,500. But the value of your home has increased to $300,000. So the equity is actually higher. Factoring in the advice above, with an insured mortgage you could access 95% of the home's value, meaning your equity is $285,000 (95% of home's value) - $222,500 (current mortgage balance) = $62,500. For a conventional, uninsured mortgage where you can access 80% of the home's value, the amount of equity would be $240,000 - $222,500 = $17,500.

* Once you have determined the equity you have in your home, you can start to discuss your refinance options with your mortgage professional. The examples above use standard, conservative figures. Keep in mind that many mortgage brokers can secure refinancing at levels higher than 95% loan-to-value (LTV).

* You should also note that a cash-out mortgage refinance enables you to take out more than you currently owe on your mortgage and use it for other expenses. You can put the extra funds towards paying off debts, financing home renovations or paying part of your children's tuition.

Refinancing as a Savings Strategy

Refinancing can save you money by consolidating debts, but it can also help in other ways, when the economic conditions are right:

* When interest rates drop and you are planning to stay in your home a long time, refinancing to obtain a lower rate can help decrease your monthly payments. To consider this strategy, ensure that the interest rate you are currently paying is at least 2% higher than the market rate.

* Change to a shorter amortization to pay off your mortgage faster.

* In times when interest rates are fairly stable you can refinance to
change your mortgage from fixed to variable, or vice versa. Talk to your mortgage professional to ensure you are getting the best rate.

Before deciding on a mortgage refinance, read the fine print on your current mortgage. There may be fees for repaying early. Also factor in the fees that you will be charged for your new mortgage. They are often the same as the fees charged for your original mortgage - legal fees, title search, application fees and so on.

If all the numbers make sense, speak with a mortgage broker about mortgage refinance and start saving your money.

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Both Tom Allen & Diane Canada 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.

Tom Allen has sinced written about articles on various topics from Legal Matters, Online Security and Language. Tom writes for . A site that provides clear information andcalculators for all you mortgage needs.. Tom Allen's top article generates over 8100 views. to your Favourites.

Diane Canada has sinced written about articles on various topics from Mortgage, Finances and New Jersey SEO Services. For more information on contact Canadian Mortgages Inc at 1 888 465-1432. Diane Canada's top article generates over 1000 views. to your Favourites.