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Home loan rates are at its alltime low. Unfortunately many people have not done comparison shopping with their current loan. Why the need for a comparison shopping The good deal that you got back when you originally got the loan may no longer suit your current condition. Comparison shopping can actually be free and take just a little time with the use of Internet for research.
Technically what youll be looking for is a refinance mortgage more commonly referred to as just a refinance or refi. This is where a lending institution provides you with a new loan at a lower rate and pays off your old higherrate mortgage. The new bank then holds the deed to your home as collateral until the loan is repaid.
A good rule of thumb is that if you can lower your interest rate by 1% the new home loan will be worth the cost of the refinance. No loan is free but by shopping around at sites like www.bankrate.com you can not only become familiar with the common fees charged but compare the fees charged by various lenders.
There is also a possibility that you as well as your home loan are qualified for an HUD (Housing and Urban Development) backed loan through the Federal Housing Administration (FHA). If you are a veteran you may qualify for a loan through the Veterans Administration (VA). Many times these loans will have lower interest rates and fees than a comparable conventional loan. There will be more paperwork and the process may take longer but the savings with these loans can be substantial. The loans are backed by the federal government so there is less risk for the lender and thats reflected in the interest rates and fees.
Lenders or mortgage brokers are required to give you an HUD1 or Good Faith Estimate within three days of appication. You can also ask for one when shopping around. If a lender or broker refuses to provide one so you can comparison shop consider very carefully if you want to use them. Customer service can be critical after you close on a loan and nows the time to evaluate that.
Fees are another considerationand thats where the Good Faith Estimate can help you. Every lender has different names for their fees. Origination fees Broker fees Discount fees. . . .the list might see endless and the HUD1 would not even inform you what the fees are for. But using the Good Faith Estimate can help you compare apples to apples. Regardless of what they call the various charges theyre going to be totaled at the bottom. So long as youre requesting statements regarding the same type of loanfor instance a 30year fixed rate at 6.0% with no pointsyoull be able to see how the fees and charges compare from lender to lender.
Yes this process can take some time and many lenders now charge application fees to weed out the looky loos. But comparison shopping for a mortgage even if you already have one can save you literally tens of thousands of dollars. Isnt a few hours of your time worth that
Richard Greenwood heads up a small team at the Click 4 Group who operate a number of finance comparison websites to compare credit cards and other finance products including high interest savings account products
Source: http://www.articlealley.com/article_734289_19.html
Occupation: Director Click4credit.com.au Richard Greenwood is Director of a leading credit card comparison website.
Click4credit.com.au allows users to .compare credit cards offers and apply online. The site features regular articles on credit card debt reduction & consolidation balance transfers airline rewards schemes and budgeting. http://www.click4credit.com.au