Bottom line – researching refinancing rates for a second mortgage will save you money. On an average day, rates can vary as much as a point or more. Over the course of your loan, that can add up to thousands of dollars.
No one lender will have the best rates on every type of financing. That is why you have to request quotes based on your credit, income, and property location. Each lender will weigh those factors differently and offer you a different rate.
Educate Yourself On Rate Options
No lending package fits everyone's budget. Researching rates and terms will help you decide which type of financing best meets your needs. Also remember that you can negotiate lower rates by agreeing to pay higher closing costs.
For instance, you may find a second mortgage fix rate of 6.25% for thirty years with no closing fees. The lender may also offer a 5.625% for fifteen years with closing costs. If you plan to sell your home is a year, the higher rate mortgage is actually cheaper. However, if you plan to stay in your home for several years, you would do better with the fifteen year loan.
Don't forget to check out refinancing both your mortgages into one loan. Combining your loans will lower your total rate. But if you have an especially good deal on your first mortgage, keep it.
Don't Forget To Look At Terms
Terms are just as important as rates because they can also cost you money. The shorter your loan, the less you will pay in interest costs. But you will also have a higher monthly payment.
You should also be aware of hidden fees, such as those for early payments. This can cost you thousands if you sell or refinance in the future. You also don't want to get trapped by only being able to deal with the one lender if you do choose to refinance.
With online lenders, it doesn't take long to find quotes on rates and fees. Within minutes you can have dozen of offers waiting for your review.
