IT might have been some to several years since you took your mortgage loan in New Hampshire. Your own finances might be different now and the mortgage loan market conditions too may be different. If your existing mortgage does not meet with your needs now, you would do well for yourself by considering a mortgage refinance.
Mortgage Brokers in New Hampshire
Mortgage refinance is the taking of a new mortgage loan to pay back in full your existing mortgage and then continuing to service the new loan until it is paid back. The rationale behind taking a mortgage refinance loan is that you can change the terms of your mortgage responsibility to suit your present needs with or without leveraging market conditions.
How refinance can help
Mortgage refinance helps different people in different ways. There is no single benefit that would be applicable to all people. Some of the common ways in which refinance helps are:
- Lowering monthly payments : You can get this advantage by extending the duration of your loan and/or availing of lower market rates if such rates are prevailing at the time.
- Getting a lump sum of cash : If you need cash to meet with any immediate need, you can get it by mortgage refinance if your home equity (i.e., the market price of your property) has increased considerably since you took your original mortgage loan.
- Paying only interest : If you have long-term savings including securities, pension, life insurance, and other such savings instruments, and you feel their liquidation at the end of your loan duration will cover the principal of your loan, you can get an interest-only mortgage loan whereby you pay only the interest every month. The principal will be recovered by the lender at loan maturity.
Risks and solutions :
The above are just some of the possible advantages of mortgage refinance. There can be more advantages applicable to you. Whatever be the reason for seeking mortgage refinance, remember that this is a specialist field and you cannot do all the decision-making by yourself. You have to consult mortgage refinance professionals, but you will be better equipped to deal with them if you are aware of the basic risks involved, which are described below:
- Low interest rates can be misleading : Remember that interest rate is only one cost factor in mortgage refinance. Other costs include penalty for premature closure of your existing mortgage account, valuation fees, broker's fee, payment of points (1 point = 1% of loan amount; paid to lender to reduce effective rate), etc. Therefore, you should give more importance to the 'APR' (annual percentage rate) of your loan than the interest rate.
- Broker may be biased : Brokers bring you the advantage of a bouquet of offers from different lenders, which a lender will not do since it wants to sell you its own packages. But brokers too may have their favorite lender whose packages they might try to push at you. You should therefore have basic knowledge of what you are entitled to in the market, taking into consideration facts and figures pertaining to you (e.g., your credit rating, how long you want to own your property, amount of refinance loan you need, etc) and to your property (e.g., type of home, location, etc). You can get this preliminary idea from online mortgage calculators at such sites as www.erate.com, www.mortgageloan.com, www.bankloan.com, among others). The online calculators may not give you 100% accurate results, but they are usually reliable enough to give you a base for negotiations with brokers and lenders. Also, ensure that the broker you are dealing with is registered in New Hampshire.
- Don't be swayed by advertised rates : The interest rates advertised by brokers / lenders are usually applicable to borrowers with the highest credit ratings. If your credit rating is average or below-average, don't lose heart -- you are still entitled to mortgage refinance, but the rate of interest applicable to you will be higher than the advertised rates.
- Decide which loan type is best for you : The most common types of mortgage and mortgage refinance loans are fixed-rate mortgage loans, adjustable rate mortgage loans, interest-only mortgage loans, cash-out loans, and jumbo loans. The one that is best for you depends on your specific needs. Therefore, get an idea about what the different types will do for you, by using the online calculators described above, and negotiating with lenders / brokers when you meet them.
- Don't depend on a single advisor : To ensure that you are getting the best deal the market has to offer you, you should compare and contrast offers received from different lenders / brokers, ask questions in case of major discrepancies, and finally pick your choice. Remember you don't need to pay any broker anything for advice: you pay your broker only if and when you formally accept an offer that has come through him.
Mortgage refinance is an attractive proposition in New Hampshire as well as in the other states, especially when interest rates are low. This is true, yet the benefits of low rates may not accrue to you because refinance brings with its own costs that may offset the benefit of low rates. There are also many other factors to be considered, and you have to consult mortgage refinance professionals before you take your decision. Nevertheless, there are risks on the way -- mostly arising from lack of adequate knowledge of the market. It is therefore advisable to gain basic knowledge of what the market has to offer you -- which would depend on a number of variables as described in this article.