IF you have a mortgaged property in the state of Missouri, you might stand to benefit from a mortgage refinance. Simply put, mortgage refinance is the availing of a new mortgage loan to pay back your original mortgage, and then continue to service the new loan until it too is paid back in full. You are more likely to benefit from mortgage refinance in Missouri if your existing mortgage is for 15-to-30 year period because property rates have gone up during these years and therefore your home equity has increased.
Mortgage loan in missouri
Mortgage refinance will enable you to take advantage of the increase in your home equity through the past years – and, even more so, if current interest rates are lower than the rate at which you took your original mortgage loan. However, it’s not a thumb rule that mortgage refinance is always profitable; so one has to be careful before opting for it.
Know what you want
In a mortgage market as competitive as the state of Missouri, particularly in its bigger cities, there is every chance that lenders or brokers might compromise on certain crucial information that you might discover to your dismay at a later stage. This is not to cast aspersion on the lenders / brokers: most of them are professionals out there to provide you with honest, professional service. But, as in any market segment, there might be a few black sheep too. While law demands that every mortgage broker be registered in the state they operate in, there are unfortunately a few in every state, including Missouri, who operate without registration and are therefore unauthorized.
As customer, you therefore have to be sure that you are dealing with legally authorized parties and not freelancers who are not accountable to anybody. You should also be sure that the refinance deal you have selected is the best the market can give you. The first and most important thing you should do is to determine for yourself what you want mortgage refinance to do for you. This would have required a lot of hard work in the pre-Internet era. But now, it can be done at a few clicks of the mouse. Here’s how.
Exploit the Internet
The Internet has brought the world into your computer. There are many websites of mortgage lenders and brokers on the worldwide web. In fact, an entity that does not have a god web presence may not be worth considering. So, the first thing to do is to log into the Internet and visit the websites of some such lenders and brokers. A few such websites this writer has visited and found good enough, are: www.bankrate.com, www.erate.com, and www.mortgageloan.com. This is not to mean that these are necessarily the best websites on the subject; there must be many others as good or even better: it’s just that this writer has found them good enough. It is important to note that you don’t have to look at websites of companies based only in Missouri, since mortgage rules and regulations are the same throughout the United States (except for a handful of states or territories such as Alaska, Guam, Hawaii, and US Virgin Islands). What is important is that when you start negotiating with a mortgage broker, you should be sure that he/she is registered in Missouri.
What to look for on the Internet
On the websites referred to above, you will find online mortgage calculators. You have to enter required details – such as your credit profile, type of your property, the amount of refinance loan you want, the amount remaining to be paid against your existing mortgage, the number of years you want to retain your property, and so on. You will also ‘inform the calculator’ about the type of loan you are seeking, i.e., fixed rate, adjustable rate, interest-only, and so on. You are expected to know the difference between the loan types: a fixed rate loan is one that comes with a fixed interest throughout the life of the loan; an adjustable rate loan is one with a low fixed rate for an initial number of years followed by changes in rate every year thereafter; an interest-only loan is one which you pay only the interest every month while the lender will recover the principal on maturity of the loan.
There are other types of loans too, including one in which you can get a cash out if your home equity has increased over the years since you purchased it. Try different permutations and combinations of loan types and amounts, and study the results given by the online calculators. These results may not be accurate, but are reasonably reliable to serve as a base of your negotiations with real-world brokers or lenders.
Remember APR
‘APR’ is short for ‘annual percentage rate’. It is a more reliable indicator of the actual cost of your refinance loan than the interest rate. APR includes all costs including interest, and upfront payments you have to make at the closure of your refinance loan. Also remember that you will most likely have to pay a prepayment penalty for premature termination of your existing mortgage account. All these costs put together, you may find that refinance is not the best option for you – or that it is.
Final step
Once you have gathered a reasonable idea of what could be in store for you in the mortgage refinance market, you should contact real-world lenders or brokers – preferably the latter since they come with different offers from a number of banks. You can locate brokers (as well as lenders) in your city in Missouri from the websites you refer to for the online calculators. Make sure though that the broker is registered in Missouri. And keep asking for the APRs of their offers every time they talk about interest rate. Meet at least three brokers or lenders (or a mix of the two) and compare their offers and advice. Choose the best for you. You don’t have to pay anything to anybody until you formally accept an offer from one party, and you pay him/her at the loan closure stage only. Broker fee ranges from 1% to 10% of the loan amount depending on your credit profile: better your credit profile, lower is the broker fee.
