MORTGAGE refinance means a new mortgage loan taken to pay back an existing mortgage loan and continuing to pay the rest of the new loan in installments, the property used as collateral for both the loans being the same.
Mortgage Brokers in kentucky
The state of Kentucky offers its residents several mortgage refinance options through a number of lenders and an even larger number of brokers. However, to ensure that you get the best possible deal for yourself, you should be knowledgeable about certain basic issues pertaining to mortgage refinance in Kentucky. This is because it is never a good idea to leave all decision-making to the professionals, who may or may not give your case the importance it deserves (you are anyway just one of the many people they are serving). This article will attempt to equip with mortgage refinance-related information that will stand you in good stead in your negotiations with lenders and/or brokers.
“Lowest interest rates”
This is a common claim from mortgage lenders and brokers in Kentucky. Don’t take this claim at face value. The ‘lowest interest rates’ advertised are applicable to people with top credit ratings. If you credit rating is average or below-average, you will still be entitled for refinance loan but on higher interest rates than the ‘lowest’ advertised. Keep this in mind, and bring your broker or lender to terra firma when he or she talks tries to induce you with ‘lowest interest rates’ without looking at your credit profile.
Some mortgagers in Kentucky as well as in other states of the United States have been shocked on finding out that the true cost of their mortgage refinance loan was much higher than that suggested by interest rates. They were shocked because they went by the interest rate alone until at a later stage when they discovered the ‘APR’ of their refinance loan. What’s APR? Short for annual percentage rate, APR is the true annualized cost of your loan, taking into account not only the interest cost but also other upfront payments you have to make at the closure of the refinance loan.
These costs include broker’s commission (varying between 1% to 10% depending on your credit rating; higher rating means lower commission), ‘points’ (see below), property valuation fee, penalty for early termination of your existing mortgage loan account, etc. Of course, there is no way you can sign the refinance loan agreement without being informed of the APR, but some brokers may keep mum about it until asked, or until at a much later stage. So, each time your broker or lender talks about interest rate, ask them about APR.
Points are payments made by the borrower to reduce the effective rate of interest on the loan. A point is equivalent to one per cent of the loan amount. In Kentucky, not all lenders demand points, but some do. From the borrower’s point of view, payment of points is a reasonable option since it they pay correspondingly less in the time ahead. In the case of mortgage refinance in Kentucky, points are usually required to be paid in one lump sum.
Types of mortgage refinance
The types of mortgage refinance loans are essentially the same as the types of purchase mortgage loans. They include: fixed-rate loans, adjustable-rate loans, cash-out loans, interest-only loans, jumbo loans, etc. Which type of loan is suitable for you would depend on the terms of your existing mortgage loan, and the benefits you want from the refinance loan.
For example, if you don’t intend to retain ownership of your house for long, it might make sense to move from a fixed-rate loan to an adjustable-rate loan with a low fixed interest for the initial tree or five years. If you need immediate cash, a cash-out loan would probably be the best for you (if the equity, o market value, of your house has risen since you took your purchase mortgage loan). Different permutations and combinations are possible, and no one type of loan suits everybody.
Use of web resources
Web resources are indispensable for mortgage refinance seekers. Online calculators on websites of lenders / brokers give you invaluable knowledge of what you can expect from the market. There are many such websites on the Internet, of which some are: www.interest.com, www.erate.com, www.mortgageloan.com, and www.bankrate.com. The websites whose mortgage and mortgage refinance calculators you use need not necessarily be of firms based in Kentucky; they can be of mortgage firms anywhere in the United States. Since interest rates and other macro-policies governing mortgage finance are of federal origin, the location of the lenders / brokers don’t matter as far as using their online calculators are concerned.
The calculators ask you to enter details specific to you, your house, and your refinance loan requirement. The most decisive input required is your credit profile, and you should not be wrong in entering your correct profile. Other details required are fairly simple, such as: amount remaining to be paid in your existing mortgage account, amount of refinance loan required, the interest rate you are paying and want to pay, the type of house you have, the number of years you want to own your house, the points you will pay, and so on. The calculators will indicate your eligibilities under different loan types.
Though online calculator results are not guaranteed to be accurate, they are nevertheless indicative enough to serve as a base for your subsequent negotiations with lenders / brokers. Be sure that the mortgage refinances professionals you talk to are registered to provide services in Kentucky. You can locate or contact some of them through the same websites whose online calculators you have used, though you are under no obligation to do so. There should not be wide difference between your online findings and the professional’s advice.
Talk to three or four professionals and weigh their offers against one another’s, with your online findings as the base reference. Choose the best. Pay your broker the agreed commission at the closure of the refinance loan. You don’t have to pay any other broker you talked to, unless agreed otherwise.