Refinancing your home is a big deal indeed. No decisions should be made at the spur of the moment. It is recommended that you conduct your very own research on home refinancing before going ahead to apply for a second mortgage. However, sometimes it may not be enough to rely on information you obtained simply by reading articles or leaflets given to you by potential lenders. As much as it is important for lenders to interview you to ensure that you won’t be a high risk debtor, it might also be very important for you to interview your potential lenders or creditors in order to be able to get the best deal available.

It may always be wise for you to prepare yourself before paying a visit to several local lenders. You may like to research all you can about home refinancing so when you meet up with your potential lender you will at least be prepared to ask them your questions and listen to their answers. While conducting your research, you might not necessarily need to make sure that you are already an expert on the subject but it is advisable that you take note on the things you do not quite understand so your potential lenders may elaborate for you. Your potential lenders may also be less likely to cheat you once they realize that you are not jumping in blindly and that you seem to have prepared yourself on the basics of second mortgages.

There are questions that you might need to ask your potential lenders before committing to any particular refinancing program. Some of them are as follows:

i) Which type of loan for refinancing mortgage is right for me?

Good mortgage brokers or lenders generally will not simply propose any particular mode of mortgage refinancing before actually listening in detail about your financial situation. Once they get the general idea of your predicament, they usually will suggest a few possible options for you to explore. If a lender immediately starts to bombard you with refinancing suggestions before you could even warm your seat, it may be a good idea to simply get up and leave.

ii) What is the interest rate and how much will I have to pay every month?

Mortgage refinance normally offers considerably lower interest rates as compared to other conventional loans due to the fact that your home will be put up as collateral and should you default on the payments your lenders have the authority to exercise their rights over your home. However, you might want to bear in mind that the advertised interest rates rarely include other fees and charges that you probably would end up paying more every month than how much you originally calculated based on the advertised interest rate. You have every right to ask your potential lenders to disclose any relevant and pertinent information regarding the fees and charges of a second mortgage. So it is advisable that you get them to calculate an estimate or a rough figure of how much you will actually have to pay them every month.

iii) Is there a pre-payment penalty?

As you will be making a lump sum payment on your original loan, you might actually have to pay a penalty for your early payment. Some lenders might be more than willing to dismiss the penalty particularly if you are applying for a second mortgage from the very same lender of your first mortgage. However, they do not normally offer to do so out of the blue. They might need some gentle nudging or persuading so you might need to be prepared to negotiate for any extra fees and charges that you feel should not be charged to you.

iv) What are the other costs or fees that I will have to pay for?

It may be a good idea for you to get your potential lenders to disclose in detail all the fees and charges related to your particular loan program. Charges may include those on appraisal, credit report, recording fees, taxes and perhaps lender’s title policy. Any reputable lender would not hesitate to elaborate on the fees and charges but most will not disclose the fees and charges unless you ask them first. So it would be a good idea for you to take the first step and ask.

These refinancing questions are only a few of the many important questions that you might need to ask your lenders. Depending on your particular situation, you might probably need to ask questions more specific to your needs and goals. So it might be a good idea for you to be proactive and conduct all the necessary research to prepare yourself for that interview with your lenders where you will do all the interviewing.

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