Mortgage shoppers currently searching the market to get a refinance or home purchase loan most likely intend to snag the lowest interest rate possible, nevertheless people should be aware that there are other various important factors to consider prior to making their mortgage selection of choice. These factors include home loan term, interest rate type, area home valuations, and lender underwriting approval guidelines. Without considering these factors, a borrower can end up getting in to a mortgage that has a lower overall financial benefit pertaining to their specific goals and timeframe, especially in the case of a home loan refinance. Taking the time write down your refinancing goals and timeframe is a great suggestion. Doing the additional research to find out about refinancing eligibility requirements as they relate to credit scores, income, and loan to value rules is also highly urged.

The applicant’s timeframe, or anticipated number of years they plan to stay in their mortgage is one of the most crucial aspects of picking the proper home loan. If a person’s timeframe is less than 5 years, yet they still want to take advantage of today’s historic low mortgage rates, then a 5 or 7 Year adjustable rate home loan could be the best choice for them. With this option, the borrower will receive a much lower rate as opposed to a fixed rate and maximize benefit while still receiving the same amount of principal reduction with each monthly payment. For those individuals that have an undecided timeframe, choosing a fixed rate is the safest choice for them. The true long-term borrower will definitely want to choose a fixed rate mortgage program, but may want to go with a 15 Year loan as opposed to the traditional 30 Year fixed program. Besides providing a lower interest rate, 15 Year fixed rate programs amortize much differently than a 30 Year loan. From the very first payment on a 15 Year mortgage, over 50 percent of that payment will be applied to principal reduction, while principal reduction on a 30 Year home loan will be less than 30 percent, depending on the loan amount and interest rate.

Lender fee and settlement charges should also be of prime importance to the refinance home loan shopper. Some lenders may offer the lowest interest rate, but charge high closing costs in the form of application, processing, origination, and discount point fees. After adding up the higher lender fees, the borrowers loan amount increases, and can make the payment actually higher than a loan with a higher interest rate and low refinance closing costs. Zeroing in on the lowest refinance rate advertised can end up being be a big mistake for home loan consumers if they do not analyze the lender fees associated with that low rate. It’s always best to get numerous good faith estimates and do a side-by-side comparison to determine the actual best refinance mortgage bargain. Following this simple shopping approach technique can mean the difference in thousands to tens of thousands of dollars in additional financial benefit for the borrower over the term of their new home loan.

Learn more about credit score range requirements at the Refinance Toolbox

James O’Brien is a mortgage industry professional writing articles about home mortgage loan topics. Please visit the Refinance ToolBox to learn more about home loan options along with all the nuts and bolts of mortgage refinancing. http://www.refinancetoolbox.com

Author Bio: Learn more about credit score range requirements at the Refinance Toolbox

Category: Finances
Keywords: refinance,mortgage,home,loan