WHEN one talks about mortgage refinance in Montana, it is presumed that the person has already taken a mortgage loan in the state, which he or she wants to refinance. For, if you don’t have a property that’s already mortgaged to a lender, the issue of refinance does not arise.
For the purpose of this article therefore, we shall go directly into the topic of mortgage refinance in Montana with the understanding that a mortgage refinance loan is just another mortgage loan that pays back in full the existing mortgage loan while using the same property as collateral for the refinance loan too.
The general terms and conditions, as well as the types, of mortgage refinance loans are almost the same as for purchase mortgage loans.
The Montana perspective : The overall legal framework within which the mortgage refinance market in Montana operates is the same as in the other states and territories of the United States, with some exceptions in terms of conforming loan limits in Alaska, Hawaii, Guam, and the US Virgin Islands.
Basic interest rates and other variables and non-variables of the mortgage refinance market are the same throughout the country, though. Does this mean there is no feature of the Montana marker which is different from the other states? No. If that were to be the case, there wouldn’t be a need to write this article.
Interstate differences do exist in the mortgage refinance markets, especially in terms of lender policies and, sometimes, broker commission. Intensity of scrutiny and verification of the borrower’s financial credentials is relatively higher in Montana than in, say, California or New York.
One cannot say with certainty why these differences exist, but they do since these issues are at the discretion of the lender and are outside the framework of US federal law.
Let this however not turn you off. Mortgage refinance is your right just as it is the right of the lender to scrutinize the creditworthiness of the person to whom it is lending money. Eligible mortgagers will get will get mortgage refinance; only the verification process may or may not be more rigorous.
More important however is for the mortgager, i.e., you, is to ensure that you are applying for the best refinance package for which you are qualified.
Know what you want : There is no blanket advantage of mortgage refinance. By this we mean that different people have different needs, and mortgage refinance is a preferred way to fulfill those needs.
So, at the outset, you should be clear in your mind about the specific need you want to fulfill by refinancing your mortgage. Let us therefore look at some of the needs that mortgage refinance usually fulfils :
- Debt consolidation: If you have different debt accounts – such as say credit card debt and mortgage debt – you can consolidate them into one debt account. This usually works out to a lower total monthly outgoing compared to a situation where different debts are being serviced individually.
- Reducing monthly outgoings: It may be that you want to reduce your monthly payments towards mortgage. Your responsibilities in life may have increased requiring you have more cash to spend on other needs. Or you want to move into a new home within a year or two or three, and you see sense in reducing your mortgage repayments because, ultimately, you will sell off your present home. Mortgage refinance can enable you to reduce your monthly repayments by extending the duration of your mortgage liability; but this doesn’t matter since you will sell off the house to someone else who will take on the mortgage of your current home.
- Reducing duration of your mortgage account: You have progressed in life and your financial condition has considerably improved since you purchased the home you live in. Now, you want to finis off your mortgage repayments quickly even if that means increasing your monthly repayments, which you can now afford given your better financial position.
- Meeting with an immediate financial need: The market value of your propwerty has increased since you purchased it. You may want to encash this appreciation so that you get a lump sum of cash in your account. You may want to use this cash to meet with an immediate need, or pump it back into your mortgage account to reduce your monthly payments, or reduce the overall debt burden. Mortgage refinance can make this possible.
- Availing of low interest rates: Interest rates fluctuate, almost on a daily basis. If rates are lower now than the rate you are paying on your existing mortgage account, you can reduce your monthly payments by opting for mortgage refinance.
The above are just the most common reasons for people to opt for mortgage refinance in Montana as well as elsewhere in the nited States. It is however important that you know what you want you want your mortgage refinance loan t achieve for you.
If you are not sure, you can explore different possibilities. This you can do all by yourself availing of resources on the worldwide web, i.e., the internet.
Using Internet resources : The internet has made life easier by enabling you to get things done from the comfort of home or office. In the pre-internet era, people would have to zip across the city, expending time, labor, and car fuel to get the same things done.
On the mortgage websites, you will usually find online mortgage calculators. Select the mortgage refinance option and provide the calculator with the information it asks for. Be sure that you provide as accurate information as possible – particularly your credit profile, the outstanding amount on your existing mortgage account, and the amount of refinance you want.
Use the different loan types such as fixed rate, adjustable rate, interest-only, jumbo, and so on. (Note: jumbo loans come at a higher interest rate than other types and are hence not popular).
Once you get different estimates through the online calculators, you should get talking with brokers (make sure they are registered in Montana) and lenders – preferably brockers since they get you competitive offers from competitive lenders. The websites whose calculators you used themselves give you the option of requesting personal contact from a broker in their network.
There are other websites who send you competitive quotes from three or more lenders. And do know that all these services are free. In fact, in mortgage refinance, you pay nothing to any broker at the consultation stage. You only pay that one broker who arranged the refinance loan you finally accept.
And the broker commission in Montana varies between 1% to 10%, depending on your credit score. Higher your credit score, less you pay and vice versa.
It is crucial for every mortgage refinance seeker in Montana to know the benefit he or she expects from the refinance. Of course, professional help is at hand – both through terrestrial sources and online. But nobody knows your needs better than you do.
Homework therefore is recommended before you get down to face-to-face negotiations. The internet makes the required homework very easy as explained in this article. While lenders and brokers will go all out to convince you that mortgage refinance makes enormous monetary sense to you, you must be careful.
There are situations where one does not need mortgage refinance – especially if the existing mortgage account is nearing the end of its term.
And one final point: mortgage refinance entails costs other than interest rate – such as broker commission, property valuation fees, penalty for premature termination of your existing mortgage account, ad so on.
So, don’t be swayed by ‘lowest rate’ alone. Ask for the ‘APR’ of your refinance loan – i.e., the annual percentage rate, which takes into account all the costs that will incur in obtaining your mortgage refinance loan.