OKLAHOMA offers all kinds of mortgage and mortgage refinance. While obtaining a purchase mortgage (i.e., the mortgage loan with which you purchase a property) is a relatively simple matter, it is quite different with mortgage refinance because there are many variables associated with it and you may be at a loss to decide what is best for you.
This article aims to simplify the process of deciding whether refinance would make sense to you and, if yes, identifying the best deal for you.
While going about seeking mortgage refinance in the state of Oklahoma, the uninitiated can end up making some basic mistakes that prove costly in the long run.
This problem happens not only because of lack of adequate prior knowledge of the refinance market, but also because some lenders and/or brokers may unintentionally keep certain crucial facts from you only to disclose them at a later stage (because they might have presumed you are aware).
To put you in a vantage position when you negotiate with mortgage refinance lenders / brokers, let’s look at the pieces of basic information you must have to avoid common mistakes:
- The lowest interest rates advertised by lenders / brokers are applicable to customers with above-average credit profile. If your credit profile is average or below-average, you will not be eligible for the lowest rates advertised.
- Interest rate in itself can be a highly misleading indicator of the total cost of your refinance loan. Remember there are other upfront costs you have to bear before you get your refinance loan. These upfront costs include broker commissions, property evaluation fees, penalty for prepayment of your existing mortgage loan, processing fees, points (see below) and so on. A more accurate indicator of cost of a loan is the annual percentage rate (APR), which includes all costs in addition to the interest cost.
- Points are money that you pay upfront to reduce your effective rate of interest on your refinance loan. One point is calculated as one per cent of the loan refinance loan amount. In mortgage refinance, you are usually required to pay all points at one time. So, if you agree to pay points, make sure you know you have to pay it in one lump sum.
- Though there are many types of mortgage refinance loans – especially fixed-rate, adjustable rate, interest-only – and many permutations and combinations within these broad types – remember there is no one type that is best for all. The suitability of a particular package to a particular individual depends on a number of variables specific to the individual and his/her property.
- When you consider refinance, do not overlook the second mortgage possibility too. Usually, refinance is more economical than a second mortgage, but there might be situations in which the reverse is true. Therefore, always consider the second mortgage option too: you will most probably not use this option, but do compare it with the refinance option.
- Mortgage refinance may not be advisable if your existing mortgage is nearing the end of its term, even if current interest rates are low.
The bottom line is that a refinance should make a positive difference to you. The most common benefits of refinance are one or more of the following:
- Consolidation of high-cost debt.
- Shortening the duration of your mortgage repayment responsibility by increasing, decreasing, or at no difference to your monthly payments.
- Increasing the duration of your mortgage repayment responsibility by increasing, decreasing, or at no difference to your monthly payments.
- Getting a lump sum of cash if your home equity has increased.
- Simply availing of low interest rates.
How to know what’s good for you
You alone know what way you want mortgage refinance to benefit you. You will know what you want but you are unlikely to know how to go about getting the best deal without professional help.
Yes, mortgage refinance is complex territory, but it’s not advisable to let the professional broker / lender do all the thinking for you. You can think for yourself and acquire a near-professional level of knowledge about what’s the best deal you can expect, by just using online resources.
The worldwide web contains interactive websites of different lenders / brokers in the United States. A few such websites are: www.erate.com, www.bankrate.com, www.mortgagerate.com; there are many more that you can locate through www.google.com. These websites offer a free online calculation service through online calculators. You have to feed data specific to you and your property, into these online calculators.
The most decisive data include your personal credit profile, the amount of loan you want, and the points (explained above) you are willing to pay. Other data items are also required, but they are less decisive – such as the type of property (i.e., one family, two-family, or three-family), the number of years you want to keep your ownership of the property, the exact location in Oklahoma, etc.
You also have to decide the type of refinance loan you want – i.e., fixed-rate, adjustable-rate, interest-only, and so on. Try all the loan types, compare results, and zero in on one or two of them. Though online calculator results are seldom precise, they are reasonably accurate to serve as reference during your face-to-face negotiations with lenders / broker. The websites named above are good sources of lenders / brokers closest to you in Oklahoma.
Of course, do not let your lender / broker know that you have already done online research. Let them give you independent advice. You should compare them with the suggestions you got through thru the online calculators. Ask for clarifications, etc., before selecting one offer if it does you a benefit.