MORTGAGE refinance is a loan you take to pay off your current mortgage using the same house as collateral for the new loan. The concept of mortgage refinance rose to enable mortgagees to take advantage of fall in interest rate from the rate at which you took the original mortgage loan.
Mortgage refinance enables people to alter their repayment terms to suit their needs. These needs could be paying lower monthly installments, or closing the loan early, or prolonging the loan period to reduce monthly payments, or even receiving a lump sum of money on the grant of a refinance loan.
Let's look at some of the important mortgage refinance facts pertaining to the state of Wisconsin.
Mortgage refinance basics
Mortgage refinance rates vary according to the loan type, the time you need to repay the refinance loan, value of your property, type of property, your credit profile, and so on. The types of mortgage refinance loans available in Wisconsin are the same as mortgage loans because, in essence, mortgage refinance is also a mortgage loan.
The term 'refinance' only indicates that the property you will pledge as collateral is already mortgaged to a lender and the refinance will release it from the current mortgager and pass the mortgage to the lender who lends you the refinance loan.
The lender of the refinance loan could be the same lender who lent you the original mortgage loan or a different one.
Broadly, there are two types of mortgage loans: fixed rate mortgage (FRM) and adjustable rate mortgage (ARM). FRM, as the name suggests, is at a fixed interest rate throughout the duration of the loan (the most popular duration being 30 years, though 15 years and even 40 years are possible).
ARM loans are those that come at a fixed but low rate for a specified period of initial time and then increase every year. ARM loans are denoted as, say, ARM 3/1, ARM 5/1, etc. It's easy to understand this nomenclature: ARM 3/1, for instance, means that you pay a fixed low rate for the first three years and then pay a higher rate every subsequent year.
Mortgage refinance is most advantageous if you can recover your refinancing costs within two years of taking the refinance loan, the 'pay-off' coming in the form of savings vis-à-vis your payments on the original mortgage loan.
Wisconsin has many mortgage refinance lenders and brokers. It is advisable to consult a couple of brokers, or more, to compare rates and payment volumes they offer after you have briefed them of your requirements. But before you meet any broker, or even a lender, you should do some prior homework.
This should be done online: visit the website of two or three mortgage brokers or lenders and use their online calculators to know the offers suitable to your requirement (your requirements will be specified by you in appropriate fields of the online calculator).
Details of these offers should only be used as guidelines and as your reference in your subsequent negotiations with brokers or lenders. The closing costs you are most likely to incur in mortgage refinance in Wisconsin are: title and escrow fee, lender fee, appraisal fee, credit fee, insurance and taxes, any other fee you agree with the lender.
Mortgage refinance is a good option if you want to reduce the monthly burden of your existing mortgage loan or pay-off the mortgage faster. In Wisconsin, there are several, competing mortgage refinance brokers and lenders.
Before you meet any of them, it is advisable to know what you can expect by using online calculators on websites of most mortgage lenders. And when you approach brokers, make sure they are registered to offer their services in Wisconsin.