AZ refinance is one option available to Arizona homeowners seeking to reduce monthly loan installments. Qualified borrowers take out a new mortgage loan with a reduced rate of interest and extend terms of the note. Some borrowers elect to obtain additional cash to pay off outstanding debts or make home improvements.

Before engaging in AZ refinance, homeowners should review real estate contracts to determine if a prepayment clause exists. Oftentimes, mortgage lenders assess a lower rate of interest if borrowers agree to hold the loan for a set amount of time. In most cases the timeframe is five years. If the property is sold or the loan paid early, a prepayment penalty is assessed. Penalties usually range between 2- and 4-percent of the loan value.

Mortgage loans obtained through credit unions, along with FHA and VA loans are exempt from prepayment penalties. Homeowners entertaining the idea of mortgage refinance should contact their current service provider to discuss their loan and refinance costs.

Several fees are involved with AZ refinance. In addition to prepayment penalties, borrowers may incur refinance rates for loan applications, credit checks, employment verification, lawyer review, property inspections, home appraisals, and loan closing costs.

Arizona refinance rates can quickly add up to several thousand dollars. However, property owners can recapture costs within a few years by obtaining a lower interest rate. Depending on the amount financed and rate of interest, borrowers can potentially save several thousand dollars over the course of the mortgage loan.

Borrowers often turn to their current lender to refinance mortgages, but it is a good idea to comparison shop lenders. Two good sources for comparing nationwide mortgage lenders include Bankaholic.com and BankRate.com. Both banking information portals allows visitors to compare national and Arizona-based lenders to determine current interest rates and refinance fees. Visitors can use mortgage calculators to review potential savings.

Arizona homeowners should order a current credit report and determine their credit score. Most banks require borrowers to have a fico score of 760 or higher to obtain prime interest rates. Home loan interest rates can vary upwards of 2-percent between excellent and bad credit scores. As little as 1/2-percent additional interest can add thousands of dollars to the loan balance.

Mortgage lenders provide borrowers with a good faith estimate of potential refinance rates. Good faith estimates only cover costs incurred by the bank and do not include fees from outside sources such as real estate appraisals and home inspections. Lenders provide a list of mortgage refinancing requirements and property owners contact independent contractors for cost estimates.

Mortgagors who entered into bad credit mortgage loans and have since cleared derogatory credit may benefit from AZ refinance. Loans for bad credit carry a substantially higher rate of interest which adds several thousand dollars to the loan amount.

Debtors should obtain a credit score of 720 or higher before applying for mortgage refinance. Interest rates are based on borrowers’ credit rating. Those with high scores typically receive interest reduction of 2-percent or more over bad credit borrowers.

AZ refi can be costly to initiate, so borrowers must be certain to thoroughly understand terms before entering into a new home loan. Arizona homeowners should spend time researching mortgage refi options and determine the true cost of refinancing. If necessary, consult with a real estate lawyer or mortgage consultant to determine if mortgage refinance is the best option.

Author Bio: Simon Volkov is a private real estate investor who buys and sells investment properties in Arizona and California. He has published a variety of AZ refinance, foreclosure prevention, and real estate investing articles via his website at www.SimonVolkov.com.

Category: Real Estate
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