IF you have a mortgaged house in the state of North Dakota and if a few years have passed since you took the original mortgage (also called 'purchase mortgage'), you might find it attractive to opt for mortgage refinance.
Mortgage Broker in North Dakota
Mortgage refinance basically means taking a new mortgage loan to pay back in full the original mortgage loan, and then continuing to make payments against the new loan, i.e., the mortgage refinance loan.
For a mortgage loan to be considered a mortgage refinance loan, it is necessary that the property collateralized against the refinance loan is the same as that for the original loan.
In North Dakota, there is a good number of mortgage refinance lenders and brokers who are always willing to assist you in making the right decision, but it helps if you too know the basics for you can then weigh every advice from every mortgage professional against the information you have independently obtained. This article will guide your way to obtaining such information.
Do you need refinance?
This is the first question to ask yourself. There is no one benefit of mortgage refinance applicable to all. What benefit you can derive from refinance depends on your own situation, your own needs, and your own priorities.
Contrary to popular opinion, low interest rates are not necessarily enough reason to opt for refinance since the benefit of low rates can easily be offset by the costs of a refinance loan.
There is also no single market condition that justifies one to take mortgage refinance loan (e.g., interest rates may be high but your financial standing is now better than before, so you may want to get rid of your mortgage commitments quicker even if that warrants higher payments). So, the first thing to do is to decide how you wan your mortgage refinance to benefit you.
Mortgage refinance benefits different customers in different ways. Some of the common benefits are:
- Consolidation of high-cost loans into a single loan at a lower cost.
- Getting a lump sum of cash to meet with an immediate need. This is applicable if the market value of your property has increased over time.
- Reducing your monthly payments by availing of lower rates, or extending the duration of your loan.
- Reducing the duration of your loan by making higher payments every month (if your income has risen over time), reducing or keeping unchanged your monthly payments (if interest rates have fallen or if you want to pump in a lump sum from a cash-out refinance loan).
- Paying only the interest rate and allowing the lender to recover the principal only at the end of the loan term by liquidating your investments such as securities, insurance, pension, and so on (this is advisable if you are sure your investments will appreciate over time and that you will not need the investment appreciation later in life).
- Reducing your monthly payments because you want to sell off your property soon.
The above are just the benefits for which people avail of mortgage refinance in North Dakota. Many other reasons, or combination of reasons, are possible. But the above should give you an idea of why, or why not, you should consider mortgage refinance.
In case you do not know what benefit you want from mortgage refinance and therefore want to explore the possibilities, you can do so by using online mortgage refinance calculators.
In fact, use of online calculators is strongly recommended even if you know the broad benefit you want, so that you can get approximate figures to serve as reference in your subsequent negotiations with lenders / brokers in your area of North Dakota.
Use of online calculators
As said above, online calculators should be used by both: 1) those who know the benefit they want and need approximate figures before talking to lenders / brokers, and 2) those who don't know what benefit they want but want o explore the different possible benefits. Since mortgage is a federal subject in the United States, the basic conditions for mortgage and mortgage refinance are the same in all the states (with a few exceptions like Alaska, Guam, US Virgin Islands, and Hawaii).
Therefore, you can use online calculators provided on the websites of any mortgage lender / broker operating under US law anywhere in the country, not necessarily in North Dakota alone. A few such websites are: www.erate.com, www.mortgageloan.com, www.bankrate.com, and www.interest.com. In each of these sites, there is provision for you to enter the exact location of your property, and this take into account any inter-state difference there may be.
Online calculators ask you to feed in specific information about yourself, your existing mortgage loan account, your intended refinance, your property, and other details such as the number of years you want to remain owner of the property, and the 'points' you are willing to pay for your refinance loan (remember, points for refinance loans are usually required to be paid in one lump sum, and that one point is equivalent to 1% of the intended refinance loan. Not all lenders insist on point though, but it is good if you can pay out some points since they reduce the monthly payments you would have to make).
It is important that the details you type into the online calculators are correct; otherwise, the calculators would give you drastically wrong indications. One important data is about your credit profile. A lot -- including the interest rate applicable to you -- would depend on your credit profile.
If your credit profile is poor, you may still expect a refinance loan but at higher costs. And though FICO credit ratings cannot be changed overnight, there are consultants who claim that can guide you in improving your rating. If your credit rating is poor, you should visit http://www.bankrate.com/gookeyword/news/cc/20080407_rebuild_credit_score_a1.asp to know how you can improve it -- though be sure it can't be improved overnight.
Since there are different types of mortgage refinance loans (e.g., fixed-rate, adjustable-rate, interest-only, jumbo, and a few others), try all the types and see your eligibilities under each type of refinance. Then, provisionally choose the one or two that look best for your needs. Now, even if you didn't know what benefits to expect from mortgage refinance and were using the online calculators to get an idea about the possibilities, the online calculator results can put you on firmer grounds.
Negotiating with lenders / brokers
The online calculator results are rarely accurate, but are reliable enough to serve as your base reference when you get talking to lenders / brokers. Brokers are preferable because they bring with them a bouquet of offers from different lenders, whereas lenders will only try to sell their own offers.
However, ensure that the brokers you talk to in North Dakota hold a 'Money Broker License' with the North Dakota Department of Financial Associations (Note: Mortgage brokers in North Carolina are not registered with the National Association of Mortgage Brokers). Talk to three or four brokers, weigh their offers to the indications you got from the online calculators, and choose the offer that best suits your requirements.
Finally, remember that interest rates alone are a misleading indicator for mortgage refinance since many other upfront costs have to be borne by you. You should therefore insist on knowing the annual percentage rate (APR) of your refinance loan.
The online calculators provide you the APRs for different loan types and terms, and the real-world brokers / lenders must also provide you with it from the very start of negotiations and not at a later stage.