What is mortgage refinance
Mortgage refinance is the same as a mortgage loan: the only difference being that it is used to pay off an existing mortgage loan and passing the mortgaged property into the new loan. Mortgage refinance therefore does not free your property from mortgage; it only enables you to clear your existing mortgage and taking a new mortgage for the same property.
Why mortgage refinance
People take mortgage refinance for one or more of many reasons. The underlying reason remains the same though, which is to make the terms and conditions of the mortgage repayment obligations more favorable to the loan-taker. What makes for more favorable terms varies from person to person.
It may be that the person wants to reduce his or her monthly payments, increase or decrease the duration of repayment obligation, get a lump sum of cash for an immediate need, or simply to take advantage of lower interest rates if current rates in the market have fallen since the original mortgage loan was taken.
Mortgage refinance in Alabama
Getting mortgage refinance in the state of Alabama is easy since the market is very competitive and lenders are vying with each other get business. The problem here is that lenders and brokers try to hard-sell and, in the process, the incredulous customer may not get the best possible deal.
Therefore, if the property for which you are seeking refinance is located in Alabama, you would do well for yourself if you equip yourself with basis information on the issues concerning mortgage refinance in your state.
How to go about it
It is of paramount importance that you are clear-headed about why you want mortgage refinance. Availing of low interest rates is one good reason, but it may not be enough reason if you have already paid back a major proportion of your existing mortgage or if you intend to sell-off your property soon.
This is because even if low interest rates would mean lower monthly payments, the upfront costs you most probably have to pay for the refinance would scuttle the low-interest advantage. Lenders and brokers often try to sell you ‘low interest rate’ but this can be a misleading figure if you don’t account for the cash-down payments you will have to make. The annual percentage rate (APR) of a loan is always a better indicator of the cost of a loan than only its interest rate.
Once you have decided why you want a mortgage refinance (read the first paragraph of this article again), don’t rush to a lender or a broker right away. Instead, log on to the internet and use a good search engine (e.g., www.google.com) to locate websites of mortgage refinance companies in Alabama.
On their websites, you will find online calculators. Use these calculators on a few different websites. They are easy to use: you simply have to enter the data the calculator asks for.
Typical data to be fed into the calculators include: the amount outstanding on your existing mortgage, the amount of refinance you want, the interest rate you are paying and want to pay, the type of property, the number of years you want to keep the property, its exact location (just the name of the state is not enough; you have to specify the city or the ZIP code), points you are willing to pay (one point is equivalent to 1% of the refinance you are seeking), the type of refinance you want (fixed rate or adjustable rate or an interest-only refinance), your personal credit profile, and so on.
The online calculator will give you a fairly good idea of what you can expect. If you find that a refinance option meets with your objective/s, then that’s the stage at which you should contact a lender or a broker in your city.
Some of the web resources where you will find a concise list of mortgage lenders and brokers in most cities in Alabama, are www.erate.com, www.bankrate.com, and www.mortgage-calc.com. You will get such lists from some other websites too. Contact a couple of lenders or brokers nearest to you, and take it on from there.
Conclusion
Don’t leave it to the mortgage lender or broker to decide for you. You must take your own decision based on your specific needs and the possibilities shown by online calculators.
This will give you foundational knowledge on what to expect. Call in the lender or broker to get precise details (loan details obtained through online calculators are usually approximations) and go ahead if you are convinced the selected refinance will serve your purpose.
