AZ refi rates have been steadily on the rise as Arizona homeowners capitalize on reduced interest rates. Refinancing mortgages allows property owners to substantially lower mortgage payments. However, borrowers must be financially prepared to cover the costs associated with mortgage refinance.

In order to enter into AZ refi, mortgagors must qualify for a new home loan. Funds are used to pay off the existing loan. If borrowers have sufficient home equity they can apply for additional funds to make home improvements, pay off outstanding debts, or use the money any way they choose.

Borrowers should calculate the true cost of mortgage refinance to compare overall savings. It is best to refinance mortgages only if interest rates can be reduced by 2-percent. Banks charge refinance rates which are similar to those imposed when taking out a new home loan.

Mortgagors typically must pay the costs for obtaining a real estate appraisal and home inspection, as well as legal fees for real estate transfer documents. Mortgage lenders also assess settlement fees when entering into AZ refinance.

Another consideration of AZ refi is the potential for prepayment penalties. A common practice amongst lenders is to grant borrowers a reduced rate of interest if they agree to hold the real estate for a specific period of time. If borrowers sell the real estate or refinance mortgages before the prepayment clause terminates, they will be charged a penalty.

Loans obtained through VA, FHA, or credit unions are exempt from prepayment penalties. All other types of home loans generally include a prepayment clause. Some lenders charge penalties if mortgage notes are paid off within the first 5 years, while others reduce the penalty over the duration of the loan.

Arizona mortgagors should review the Truth in Lending statement of their mortgage documents to determine if prepayment penalties are assessed. Early payoff penalties generally range between 2- and 4-percent of the loan value, which can add thousands of dollars to the cost of AZ refi.

It is best to compare mortgage lenders in order to obtain the best mortgage refinance rates. Most property owners contact their current mortgage provider to apply for refinancing. However, borrowers who spend time comparing Arizona mortgage lenders can often find lenders offering lower rates of interest or reduced refinance rates.

One trusted source for comparing Arizona mortgage providers is BankRate.com. Borrowers can compare interest and refinance rates for local and nationwide lenders. The BankRate website offers a variety of tools to help Arizona property owners determine the true cost of AZ refi.

Mortgage refinance is not necessarily the best choice for everyone. Borrowers with less than 10 years of home loan payments should carefully weigh the pros and cons of AZ refi. Extending mortgage terms could cost considerably more than the amount saved through refinancing.

Mortgagors who are having difficulty paying mortgage payments, but do not qualify for AZ refinance can obtain free housing counseling through the Department of Housing and Urban Development.

HUDs website offers information regarding foreclosure prevention strategies such as loan modification and loan consolidation. Visitors can also locate a list of Arizona housing counselors at HUD.gov.

Real estate is often the most valuable asset people own. It is crucial to obtain accurate mortgage refinance information to determine if this is the best option. Those who do not take time to consider the consequences could potentially place their home at risk for foreclosure.

Author Bio: Real estate investor, Simon Volkov has published a variety of home buying and mortgage financing articles. His website offers additional information regarding AZ refi, foreclosure prevention, and home buying tips at www.SimonVolkov.com.

Category: Real Estate
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