MORTGAGE refinance is a method of modifying the terms of mortgage repayments to take advantage of changed market conditions and/or to suit newly-risen needs of the individual.
In the state of Georgia, there are many mortgage refinance lenders and brokers waiting to advise you on how to go about refinancing your mortgage.
Mortgage Help in Georgia
But the decision-making concerning mortgage refinance should not be left entirely to the market operators – except at your own risk. The risk arises from the basic fact that your deal will just another transaction for the lender or broker – while, to you, it will be one of the most crucial decisions in your lifetime.
To ensure that you get the best possible deal for you, it is necessary that you yourself are equipped with facts and figures around which you can negotiate with the market operators. This article is a helping hand to you in seeking, and finally signing up, the best mortgage refinance deal you are entitled to.
Mortgage refinance is not a straightforward market where you go, survey, select and buy – all in a matter of hours, if not minutes. Mortgage refinance is a complex market with many variables, permutations and combinations of offers – not all of which are address the needs of all people.
One has to be discerning, understanding, bargaining and even questioning in order to ensure the right terms and conditions of the loan one finally selects. This is facilitated by first getting rid of certain misconceptions about mortgage refinance, the most common of which are as follows :
- ‘Lowest’ interest rates : You are likely to be in for disappointment if ‘lowest’ interest rates advertised by brokers propel you to opt for mortgage refinance. You must know that the advertised rates are applicable to people with the above-average credit ratings, while the truth is that most of us have average ratings and some of us, below-average. Therefore, even if the advertised rates serve as the initial attraction for you, don’t lose time in asking the lender / broker what rate would be applicable to you, with your credit profile.
- Low credit profile : People with low – even below average – credit rating can get a mortgage refinance loan in Georgia. However, many such people usually have to pay higher interest rates and higher broker commission. In Georgia, the broker commission varies from 1% to 10% of the loan amount. If your credit profile is low, you pay a higher commission to the broker and, of course, a higher interest to the lender.
- Cost of refinance : No error could be more serious than taking the interest rate as the sole indicator of the cost of a refinance loan. The fact is that interest is only one cost-head: there are quite a few other costs you have meet upfront before the refinance comes into effect. These costs include the property valuation charges, broker commission, processing fees, stamp papers, points that you may have to pay in a lump sum, and – last but not the least – the penalty you will incur for prematurely terminating your existing mortgage account. The total cost of your mortgage refinance loan will be represented in the ‘annual percentage rate’ or APR. So, insist on knowing the APR each time the lender or broker talks about interest rate.
- Interest vs. amount of loan : There is a widespread misconception not only in Georgia but in all states that the longer-term loans come at a lower interest rate than shorter-term loans. Nothing could be farther from fact. Whether it is a purchase mortgage loan or a mortgage refinance loan, the longer the duration of your loan, the higher is the interest rate applicable. This is true for all types of loans including fixed-rate and adjustable-rate.
- Cash-out : Cash-out through mortgage refinance is a possibility, but not always applicable. It is applicable only if the market value of your house has increased substantially since you took the purchase mortgage loan and if you have opted for cash-out. Though cash-out is good since it gets a lump sum of money in your account, it is not a good idea to avail of it if you don’t need that extra cash. It’s far better to use the cash to reduce the amount of refinance loan or to reduce monthly payments. Of course, this would not be an option if you need the cash.
- Brokers : It is advisable to go about mortgage refinance through brokers than directly with lenders. Make sure the brokers you talk to are registered in the state of Georgia. Brokers in Georgia bring offers from competitive lenders, so you have a wide choice. Some of them are especially good for sub-prime Lenders, on the other hand, can only make offers from their own portfolio and less flexible to your needs.
Okay, ultimately, brokers too get your loan from a lender, but they are more influential with lenders since they have a regular business relationship. Also, remember you don’t have to pay every broker you talk to, regardless of how much time they have devoted to you. You only pay the broker through whom you finally take your refinance loan.
- Regulatory framework : Since interest rates in the United States are governed by the Fed, many people believe that terms and conditions of mortgage refinance are the same in every single state. Yes, this is true to the extent of basic interest rates that prevail in the market, but lenders in different states have their own rules and regulations in addition to those prescribed by the Fed. The additional rules pertain to stringency of verification measures, policy towards sub-prime borrowers, policy on points (points are upfront payments you may have to make to reduce your monthly payments), and so on. Thus, the ease of getting a refinance loan is not the same in every state. Lenders in Georgia are known to be more lenient than their counterparts in, say, Vermont, but less than in, say, New York.
Now that you have dispelled misconceptions about mortgage refinance, it is time to start number crunching. You need to know what the market can offer you after factoring in your parameters such as your credit profile, the amount remaining to be paid against your purchase mortgage, the amount of refinance loan you need, the type and precise location (ZIP code) of your property in Georgia, the number of years you want to remain owner of the house, etc.
You can know your approximate eligibilities under different loan types by using online mortgage refinance calculators available on the websites of many lenders and brokers.
You don’t have to use websites of firms based in Georgia itself; the online calculators have a program logic that takes into account the state and city your house is in, and show their results accordingly. This writer found some good calculators at www.mortgageloan.com, www.erate.com, and www.bankrate.com, though there must be many other websites that provide equally good calculators.
You simply have to feed in the details the calculators as for and you get immediate results or you get results separately by email without any obligation from either side.
Compare and contrast the results you thus obtain from online calculators. This will give you a reasonable idea of what is in store for you in the mortgage refinance market of Georgia.
Once equipped with knowledge of your likely eligibilities, you should get in touch with lenders or brokers – preferably brokers for reasons explained earlier in this article.
Some of the websites on which you find online mortgage calculators also contain directories of brokers and lenders (mostly brokers) in almost every city and town of Georgia, while others get a broker from their panel to contact you. The name of the game from now until you select an offer is: compare, contrast, reject, and select.