MORTGAGE refinance is an option available to Maryland, mortgagers to revise the terms of their mortgage by paying off in full the original mortgage loan with a new mortgage loan, and then making monthly payments to clear off the second loan.
The option of mortgage refinance should be exercised only after due consideration of all factors concerned and if such consideration indicated tangible benefits for the mortgager.
There is no one set of benefits that apply to all mortgagers because circumstances vary from person to person. In this article, we shall deal with the factors that would make mortgage refinance a sensible option in the state of Maryland.
Objective of refinance
Maryland houses many mortgage lenders and brokers who will eave no stone unturned to convince you that mortgage refinance is good for you. However, it is you who knows best what is, and what isn't, good for you. Before you make your first move toward mortgage refinance, ask yourself what you want the refinance to do for you.
Do you want to take advantage of a lower interest rate than the one you are paying on your current mortgage loan? Or do you want to pay back your existing mortgage quicker than earlier envisaged, even if that entails higher monthly payments?
Or the other way round: do you want to prolong the duration of your mortgage because you want to reduce your monthly payments? Are you in an unforeseen need of cash and want to check out if you can get a lump sum if you refinance mortgage?
Or are you in financially trying times, which make it necessary for you to drastically reduce your monthly payments and then make a 'balloon payment' many years later when your loan account reaches its maturity (by which time you expect your financial situation to be considerably better)?
The permutations and combinations of the reason/s for you to want mortgage refinance can be many. Suffice it to say that you -- yes, you -- must first decide why you want to refinance your mortgage.
Online research
To get a quantitative idea about how sensible mortgage refinance will be for you, the easiest and most widely-used way in Maryland is to use online calculators available on most mortgage loan websites (e.g., www.interest.com, www.mortgageloan.com, www.bankrate.com, www.erate.com, and others).
You have to input data asked by the calculator, such as: the amount of money outstanding on your existing mortgage, the amount of refinance you want, your credit profile, the interest rate you are now paying and the one you want to pay, the type of loan you want, the type of house you have, its location, the number of years you want to own the house, etc.
Once you have inputted these details, a click of the mouse will bring into your view the different offers you may be entitled to. Once you get an idea from such online research, and if the findings encourage you to go for refinance, then -- and only then -- is it time to get negotiating with lenders / brokers in your city in Maryland.
Negotiating with lenders / brokers: Even though you have to pay a commission to the broker from which you finalize your refinance deal, it is often better to talk to them rather than the lenders directly. Brokers come with a portfolio of offers from different lenders, thus giving you a wider choice.
The flip side here is that the broker may only make offers from specific lenders who are 'close' to him or her, and you might not know what you are missing.
This is the situation where the results of your online research come handy. Once the broker knows you are not ignorant of the market, he will behave -- or you can replace him if he still brings offers that are at wide variance from your online findings. For this to be reliable guide, you should be sure that the data you provided the online calculator is the same as that you have provided to the broker.
Having said that, let it also be said that you can bypass the brokers and approach a lender: you can trust a specific lender if his offers are in a rough harmony with your online findings. To be safe, talk to two or three parties (both lenders and brokers), compare their offers, and choose the one that makes sense to you. Also, remember to ask for the 'APR' of your refinance loan since it is a more accurate expression of the cost of your new loan than interest rate alone.
Conclusion
In mortgage refinance, the rule is: tread with caution. Inform yourself -- through free online calculators -- about what the market has in store for you. The calculators may not give you 100% accurate results, but they are more often than not reliable enough to give you foundational strength to negotiate with hard-nosed lenders and brokers.
In any case, don't take any one lender or broker for granted. Talk to a few, compare offers, and take the one best for you. Remember that low interest rate is not necessarily enough reason to opt for refinances, nor that low monthly payments mean low interest.
You only need to know what you want refinance to do for you. If it does that, go for it. Else, you are better off without refinance.
